IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT AHMEDABAD COURT - I Appeal No.C/13445/2013-DB Arising out of: F.No.S/10-79/Adjournment/2013-14, dt.15.10.2013 Passed by: Commissioner of Customs, Kandla For approval and signature: Mr.M.V. Ravindran, Honble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities? Appellant: M/s Swiber Offshore Construction Pvt.Ltd. Respondent: CC Kandla Represented by: For Assessee: Shri S. Purohit, Adv. For Revenue: Shri K. Sivakumar, Addl.Commissioner (A.R.) CORAM: MR.M.V. RAVINDRAN, HONBLE MEMBER (JUDICIAL) MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL) Date of Hearing/Decision:28.10.13 Order No. A/11412/2013, dt. 28.10.2013 Per: M.V. Ravindran
1. The appellant has challenged an Order passed on 15-10-2013 by the adjudicating authority and communicated to the appellant vide Record of Personal Hearing, rejecting request for examining witnesses and allowing their cross-examination despite specific reliance by the appellant on section 138B of the Customs Act, 1962, as also a judgment of Honble Delhi High Court in Basudev Garg vs Commissioner of Customs, 2013 (294) ELT 0353 (Del.) in which the said section was considered at length. The appellant is also aggrieved by rejection of the request for allowing cross-examination of the Chief Chemist (EC), DGH, whose opinion is relied against them in the SCN despite being without support of any statutory provisions and also contrary to the law laid down by this Tribunal in Clough Engineering Ltd., 2006 (198) ELT 457 (T), upheld by the Honble Apex Court in CC Vs. Clough Engineering Ltd., 2006 (202) ELT A59 (SC). The issue involved in the appeal is therefore in narrow compass and does not require any detailed appreciation of evidence as such.
2. After hearing both sides and considering carefully the records, the following undisputed facts are noted - 2.1 That a show cause notice dated 26.9.2013 was issued to the appellant which is answerable to the Respondent adjudicating authority. The show cause notice seeks to deny benefit of Notification No. 021/2002 dated 01.03.2002, demands duty with interest and proposes imposition of penalty on the appellant by relying inter alia on statements of witnesses recorded under section 108 of the Act before gazette officers of Customs, as also on the opinion of Chief Chemist (DGH). 2.2 The show cause notice was issued only after the order dated 05.09.2013 passed by the Honble Bombay High Court in a WP (Civil) 8022/2013 preferred by the appellant, directing the department to issue a show cause notice to the Appellant within four weeks from 05.09.2013 with further direction that the adjudication shall be completed within six weeks thereafter (i.e. upto 07.11.2013 - within six weeks from 26.09.2013). 2.3 Vide letter dated 07-10-2013 the Appellant filed preliminary reply denying the allegations and inter alia contending that they reserves right to file final reply after the examination of the witnesses by the Adjudicating Authority in terms of Section 138B(2) of the Customs Act, 1962, who may be summoned and examined under advance intimation to the Appellant and its Advocate so that in case their statements are considered relevant and admitted in evidence by the Adjudicating Authority, the witnesses can be cross-examined on behalf of the Appellant with permission of the Adjudicating Authority. Cross-examination of Chief Chemist (EC), DGH was also sought. 2.4 This request was perfunctorily rejected by adjudicating authority vide letter dated 09-10-2013 and personal hearing was granted. 2.5 Further submissions were tendered on 15.10.2013 in personal hearing and the Appellant sought reconsideration of the request earlier made with further reasons inviting specific attention of the Adjudicating Authority to the binding precedent of the Honble Delhi High Court in the matter Basudev Garg (supra). 2.6 However, the request was rejected again without dealing with any of the submissions made and precedent cited by the Appellant. The rejection of request by the adjudicating authority was recorded and communicated vide Record of Personal Hearing, and hence the appellant has preferred the appeal.
3. We find sufficient merit in the arguments of the Ld. Counsel appearing for the appellant on the basis of clear language of section 138B of the Customs Act, 1962 as also the binding precedents relied by him. The Departmental Representative could neither justify the departure by the adjudicating authority from the procedure prescribed under section 138B, nor could he produce any precedent showing contrary view taken after consideration of section 138B.
4. While reproducing section 138B of Customs Act, 1962 and considering its scope vis-`-vis denial of request for cross-examination, it was observed by the Honble High Court in Basudev Garg (supra) that- 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. The Division Bench also observed as under :- 29.?Thus, when we examine the provision as to whether the provision confers unguided powers or not, the conclusion is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi judicial authority. The very fact that the statement of such a person can be treated as relevant only when the specified ground is established, it is obvious that there has to be objective formation of opinion based on sufficient material on record to come to the conclusion that such a ground exists. Before forming such an opinion, the quasi judicial authority would confront the assessee as well, during the proceedings, which shall give the assessee a chance to make his submissions in this behalf. It goes without saying that the authority would record reasons, based upon the said material, for such a decision effectively. Therefore, the elements of giving opportunity and recording of reasons are inherent in the exercise of powers. The aggrieved party is not remediless. This order/opinion formed by the quasi judicial authority is subject to judicial review by the appellate authority. The aggrieved party can always challenge that in a particular case invocation of such a provision was not warranted. 15.?The observations and conclusions arrived at by the Division Bench in the case of J&K Cigarettes Ltd. (supra) would apply with equal vigour to the provisions of section 138B of the Customs Act, 1962. We find that this aspect of the matter has not been considered by any of the authorities below. In fact, section 138B of the Customs Act, 1962 has not been examined at all.
5. We are bound by the said judgment of the Honble Delhi High Court.
6. We therefore have no hesitation in holding that the impugned Order passed by the Commissioner as an adjudicating authority is appealable order in terms of section 129A of the Act, even as per the ratio laid down in the above binding precedent. Request for cross-examination has been denied and the witnesses have not been examined despite specific reliance by the appellant on section 138B without there being any objective formation of opinion based on any material on record to come to the conclusion that any specified circumstance mentioned in section 138B(1)(a) exists. These circumstances mentioned in section 138B(1)(a) are also contained in pari materia section 9d(1)(a) and were recorded as follows in J.K. Cigarettes Ltd, 2009 (242) ELT 353 (Del)- 25.?Section 9D of the Act stipulates following five circumstances, already taken note of, under which statements previously recorded can be made relevant. These are :- (a) when the person who had given the statement is dead; (b) when he cannot be found; (c) when he is incapable of giving evidence; (d) when he is kept out of the way by the adverse party; and (e) when his presence cannot be obtained without an amount of delay or expense, which the Officer considers unreasonable. These circumstances show that if witness cannot be examined for any of these five reasons, the statement previously recorded would be relevant. The adjudicating authority was therefore bound to follow the binding precedent and in absence of any specified circumstance to consider the statement relevant without examining the witnesses, erred in rejecting the request of the appellant to examine the witnesses and to offer them for cross-examination.
7. The judgment of Honble Delhi High Court in Slotco Steel Products Pvt Ltd, 2012 (281) ELT 193 (Del.) also relies on J.K. Cigarettes Ltd (supra).
8. The appellant has also relied on the judgment of Honble Apex Court in Sukhwant Singh vs State of Punjab, (1995) 3 SCC 367 to give emphasis on his submission that examination of witness is mandatory unless specified exceptional circumstances mentioned in clause (a) of section 138B(1) exist. The Honble Apex Court was pleased to hold that- 8. It will be pertinent at this stage to refer to Section 138 of the Evidence Act which provides: 138. 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 for 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.
9. It would, thus be seen that Section 138 (supra) envisages that a witness would first be examined-in-chief and then subjected to cross-examination and for seeking any clarification, the witness may be re-examined by the prosecution. There is, in our opinion, no meaning in tendering a witness for cross-examination only. Tendering of a witness for cross-examination, as a matter of fact, amounts to giving up of the witness by the prosecution as it does not choose to examine him in chief. 18. Thus, it is seen that the Bombay, Kerala, Calcutta, Madras and Punjab High Courts have notwithstanding the provisions of Section 288 of the Code of 1898 consistently taken the view that there is no procedure whereby the prosecution is permitted to tender a witness for cross-examination only, without there being any examination-in-chief in relation to which, such a witness can be cross-examined. The practice of tendering a witness for cross-examination has been consistently discouraged and even condemned by these High Courts and in our opinion rightly. Our attention has not been drawn to any judgment of any other High Court which may have taken the contrary view.
9. The Ld. Counsel has also shown from para 28 of the judgment of Honble Apex Court in Vinod Solanki vs Union of India, (2008) 16 SCC 537, that section 24 of the Evidence Act would be attracted in case of the statement recorded under section 108 of the Act.
10. We therefore find force in the submission of the Ld. Counsel for the appellant. We find no reason to justify rejection of request made by the appellant to the adjudicating authority in light of section 138B of the Act, to summon witnesses for examination and to offer them for cross-examination if their statements were to be considered as relevant and admitted in evidence in the interest of justice.
11. We also find that the denial of request to permit cross-examination of the Chief Chemist (DGH), whose opinion is relied in the show cause notice, is also wholly unjustified.
12. The appeals are therefore allowed with direction to the Respondent adjudicating authority to follow section 138B and to forthwith summon the witnesses for examination under intimation to the appellant, and to offer them for cross-examination by the appellant if their statements are to be considered as relevant and admitted in evidence in the interest of justice. The appellant is also entitled for Cross-examination of the Chief Chemist (EC), DGH. The Appellant shall also extend its full co-operation in expediting the adjudication process so that it can be completed within the time as directed by the Honble High Court. (Operative portion of the order pronounced in Court) (H.K. Thakur) (M.V. Ravindran) Member (Technical) Member (Judicial) cbb 9