By TIOL News Service

NEW DELHI, JUNE 06, 2013: IN all the appeals filed before the High Court, the common issue that has been sought to be raised by the appellants is that the appellants have made a request of cross-examination of the persons whose statements have been referred to in the show-cause notice as also relied upon by the Commissioner in the Order-in-Original. The request for cross-examination has also not been acceded to by the CESTAT. The result being that the appellants have been deprived of their right to cross-examine the makers of the statements. It is contended that the statements, unless the exceptions carved out in Section 138 (B) of the Customs, 1962 are clearly made out, cannot be regarded as being relevant and therefore cannot form the basis of proving the truth of the facts contained in the statements.

The show cause notices contained references to several statements of various individuals. In one case 21 statements of different individuals have been referred. The right to cross-examine had been denied by the Commissioner of Customs on the understanding that no right of cross-examination of witnesses and Officers of Customs exists in the noticees in the course of adjudication proceedings. The Tribunal also brushed aside the request of the appellants.

After hearing the parties, the High Court held:

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. The decision of Delhi court in 2009 -TIOL-478-HC-DEL-CX. clinches the issue in favour of the appellant.

The Division Bench in the above case 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 quasijudicial proceedings.

The observations and conclusions arrived at by the Division Bench would apply with equal vigour to the provisions of Section 138B of the Customs Act, 1962. 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.

Therefore, the High Court held that the Tribunal should have a fresh look at these cases keeping in mind the provisions of Section 138B as also the decision in J & K Cigarettes Ltd.

(See 2013-TIOL-464-HC-DEL-CUS)