Rajkumar Gowthaman vs The Joint Commissioner of Customs (Preventive), Trichy

W.P.(MD)No.3009 of 2020 Rajkumar Gowthaman v. The Joint Commissioner of Customs(Preventive), Trichy.

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

Reserved on : 29.10.2021 Pronounced on : 28.05.2022

CORAM

THE HON'BLE MR.JUSTICE R.SURESH KUMAR

W.P.(MD)No.3009 of 2020 and W.M.P(MD).Nos.2548 of 2020 and 8919 of 2021 (Through Video Conference)

Rajkumar Gowthaman .. Petitioner

Vs.

The Joint Commissioner of Customs(Preventive), O/o.Commissioner of Customs, No.1, Williams Road, Cantonment, Tiruchirappalli-620 001. .. Respondent

Prayer: Writ Petition is filed under Article 226 of Constitution of India

to issue a Writ of Certiorari, to call for the records in respect of the

adjudication order passed by the respondent in C.No.VIII/10/17/2016,

dated 13.12.2019 and quash the same.

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For Petitioner : Mr.B.Kumar Senior Counsel for Mr.S.Sivakumar

For Respondent : Mr.B.Vijay Karthikeyan Senior Standing Counsel

ORDER

The necessary facts, which are required to be noticed for the

disposal of this writ petition are as follows:

On 28.10.2015, based on the specific input received from the

Directorate of Revenue Intelligence, Chennai Zone, surveillance on the

movement of vehicles were mounted in the Pattukkottai-Thanjavur

Highway, where, the officers of the customs identified and intercepted a

TATA Indica Vista car bearing Registration No.TN-47-AD-7027 at

Pulavankadu. Two persons were inside the vehicle, namely,

M.Karthikeyan of Karur and A.Sheik Fareed of Pallapatti, Karur

District. On a reasonable belief, in pursuant to the intelligence, since the

smuggling of gold were not denied by the two persons, the car along

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with the occupants were taken to the office of the Assistant

Commissioner of Central Excise and Service Tax, Thanjavur, for

detailed examination.

2.On the thorough examination of the vehicle in the presence of

two independent witnesses and the suspects, the officers of the revenue

noticed 12 packets wrapped with white colour adhesive tapes kept

concealed under the back seat of the car. Subsequently, the occupants

said to have admitted that the boxes contained gold smuggled from

Srilanka via Muthupettai sea shore and received by a person, by name,

one Raj near Thambikottai and they were meant for onward

carriage/transportation to Chennai.

3.Thereafter on opening the boxes, the officers found that the 12

packets contained 104 yellow coloured metal biscuits and bars. Upon

examination of the same 80 biscuits were found to be gold biscuits with

foreign markings and 24 numbers of yellow coloured metal bars in

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crude form and thereafter, the gold Assayer assessed the biscuits and

certified that all the 80 pieces of foreign marked gold biscuits have

purity of 24 carat and 24 numbers of yellow coloured metal bars were

gold bars in crude form with the purity of 24 carat. He also ascertained

the total weight of the 80 pieces of foreign marked gold biscuits as

8000 grams (each 100 grams) and the total weight of 24 pieces of gold

bars in crude form as 7229 grams and altogether weighing 15229 grams.

The total value of the goods was also arrived at Rs.4,12,70,590/- based

on the prevailing market rate of Rs.2,710/- per gram of 24 carat gold.

4.Pursuant to this incident, actions were initiated against those

two persons, and also against some other persons, based on the input the

customs received from those two persons. Ultimately, an adjudication

proceedings went on and an adjudication order was passed by the

customs on 31.03.2017, where, the goods, which were seized, were

ordered for absolute confiscation including the packaging material as

well as the vehicle, that is, TATA Indica Vista car, under the provisions

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of the Customs Act, 1962 (in short 'the Act') and the authorities also

imposed a penalty under Section 112 of the Act, on three persons,

namely, one Siddique Gani imposing a penalty of Rs.1,00,00,000/-

(Rupees one crore only) under Section 112(a) of the Act, and against the

two other persons, namely, Sheik Fareed and Karthikeyan, who were

present in the car at the time of seizure, a sum of Rs.50,00,000/-(Rupees

fifty lakhs only) each, under Section 112(b) of the Act.

5.Pursuant to the said adjudication process and the order of

adjudication passed on 31.03.2017, based on the input supplied by them

implicating the petitioner herein, the Customs has come forward to issue

a show cause notice to the petitioner on 08.09.2017.

6.The said show cause notice was under challenge in W.P.No.

26000 of 2017 filed by the petitioner herein before the Principal Bench

of this Court, where, initially by order, dated 05.10.2017 an interim

order not to precipitate the matter further was ordered, and thereafter, on

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the basis of the arguments advanced on both sides, on 01.11.2017, the

writ Court directed the customs to file an affidavit that, whether the

customs will be willing to adjudicate the impugned show cause notice

without any reference to the findings in the adjudication order, dated

31.03.2017 made against the three persons referred to above.

7.Pursuant to the same, on 08.11.2017, an affidavit was filed,

recording the same, the writ Court passed the following order:

“5.Today, when the matter is heard, an affidavit of undertaking dated 08.11.2017 has been filed by the Joint Commissioner of Customs (Preventive), Office of the Commissioner of Customs (Preventive), Trichy, who is the adjudicating authority for the said case and paragraph no.8 of the affidavit would be relevant, which is quoted hereinbelow:-

“8.I state that accordingly, the Joint Commissioner of Customs, Trichy do undertake to adjudicate the above 8 said Show Cause Notice

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F.No.DRICZU/TTN/VIII/48/INT-2015 dated 08.09.2017 without being influenced by the findings rendered in the Order in Original No.TCP-CUSTOMS- PRVADC-014-17 dated 31.03.2017 but based upon the available material and statement recorded under the provisions of the Customs Act, 1962.”

6.The learned counsel appearing for the petitioner, on instructions, submits that the averments set out in paragraph no.8 of the affidavit of undertaking filed by the adjudicating authority would be sufficient to safeguard the interest of the petitioner.

7.In the light of the above, the affidavit of undertaking dated 08.11.2017 filed by the adjudicating authority, is placed on record and the writ petition is disposed of with a direction to the adjudicating authority to adjudicate the show cause notice without being influenced by the findings rendered in the order-in-original dated 31.03.2017 and proceed based on the available material and the

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statement recorded under the provisions of the Customs Act, 1962.

8.With the above observations, the writ petition stands disposed of. No costs. Consequently, connected miscellaneous petition is closed.”

8.Subsequent to the same, a speaking order was passed by the

customs on 20.02.2018, in response to the request made by the

petitioner, dated 15.01.2018 to give a chance of cross-examination of

the two persons from whom statements were obtained, whereby, the

petitioner was implicated in the case, rejecting the claim of the

petitioner for cross-examination of the co-accused. The relevant portion

of the said speaking order, dated 20.02.2018 reads thus:

“Further in the subject case six PH have already been given on 24.10.2017, 27.10.2017, 03.11.2017, 15.01.2018, 18.01.2018 and 22.01.2018. But none of the noticee has appeared during the said PH.

In view of the above, the request for cross-

examination of the co-accused is denied herewith.

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Further, as per the direction of Hon'ble High Court of Madras the case is taken up for adjudication on the basis of available materials and the statements recorded under the provisions of the Customs Act, 1962.”

9.On the same day, that is, on 20.02.2018, an adjudication order

also was passed against the petitioner, which was issued on 07.03.2018,

whereby, the customs had imposed a penalty on the petitioner under

Section 112 of the Act for a sum of Rs.1,00,00,000/- along with four

others, namely, one Mohammed Ibrahim, Mansur Ali, Raj and Palani by

imposing a penalty of Rs.25,00,000/-, Rs.10,00,000/-, Rs.50,00,000/-

and Rs.50,00,000/- respectively.

10.The said order of adjudication, dated 20.02.2018 was under

challenge before this Court by the writ petition filed by the petitioner in

W.P.(MD)No.10345 of 2018. The said writ petition was disposed of by

the writ Court, that is, the Madurai Bench of this Court on 18.12.2018,

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where, the learned Judge has passed the following order:

"7.The learned standing counsel appearing on behalf of the respondent would submit that the issue on hand is no longer res integra. His contention is that the writ petitioner has no right to ask for cross examination of a co-noticee and that this issue has already been decided by the Hon'ble High Court of Delhi as well as Hon'ble High Court of Allahabad, whose decisions were followed by me vide order dated 27.02.2018 in W.P.(MD) No.863 of 2018. No doubt, the said submission of the respondent is well founded. But this as rightly pointed out by the learned senior counsel appearing for the writ petitioner, the sheet anchor of the approach adopted by me was the premise that the co-noticees can complain of infraction of their fundamental right under Article 20(3) of the Constitution of India if they were subjected to cross examination.

8. As rightly contended by the learned senior counsel appearing for the writ petitioner, the impugned proceedings are adjudicatory in

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character and they cannot be called as criminal proceedings. The persons against whom the adjudication proceedings are taken under Chapter XIV of the Customs Act cannot be labeled as accused. In this regard, the learned senior counsel placed reliance on the decisions of the Hon'ble Supreme Court reported in 1996 2 SCC 471 in the matter of Director of Enforcement vs M.C.T.M.Corporation Pvt. Ltd., and others. No doubt, those proceedings pertain to Foreign Exchange Regulations Act, 1947. But then, the principle laid down in the said decision can be applied with equal force even to proceedings arising under the Customs Act of 1962. This aspect of the matter was not argued before me when I disposed of W.P.(MD) No.863 of 2018.

9. A mere look at the order dated 20.02.2018 rejecting the writ petitioner's request for cross examination starts and ends by describing Siddique Gani and Mohammed Ibrahim as co-accused. The opening line reads as “With respect to the request for the cross examination of the co-accused” and it

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ends as follows, “the request for cross examination of the co-accused is denied”. Admittedly, the said Siddique Gani and Mohammed Ibrahim cannot be called as co-accused. The writ petitioner is also not figuring as an accused. Between these two sentences, the Authority has only referred to a host of case laws and there is no discussion of the facts involved. In fact, the first case law reported in 2006 (194) E.L.T. 290 (Tri.Del) referred to by the respondent states that one cannot insist on the right of cross examination and one cannot demand cross examination as a matter of right. It means that a demand can be made and it will have to be considered. In this case, there is absolutely no consideration of the petitioner's request at all. The order in my view is virtually a non-speaking order.

10.In this view of the matter, the order impugned in the writ petition stands quashed and the writ petition is Allowed. The matter is remitted back to the file of the respondent to pass orders afresh in accordance with law. The respondents will first consider the petitioners's request for cross

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examination by taking into account the facts obtaining in this case and pass a speaking order and only thereafter take up the matter on merits. No costs. Consequently, connected miscellaneous petitions are closed "

11.Pursuant to the said order passed by the writ Court, dated

18.12.2018, atleast three times, that opportunity was given for cross-

examination of the two persons, namely, Siddique Gani and Mohammed

Ibrahim, but in none of these occasions, eventhough the petitioner with

his representative or counsel present for cross-examination, those two

persons appeared. Thereafter, a written submission to the show cause

notice, dated 08.09.2017 in detail had been given by the petitioner on

25.09.2019, where the main ground raised by the petitioner is that, since

the customs could not produce the two persons for cross-examination

and in this regard, the customs department has failed to summon those

persons by using coercive process, and only sending summons, which is

probably ignored by the recipients, it is only a lip- service and a pretend

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in complying with the order of the High Court, dated 18.12.2018,

therefore, the statements given cannot be relied upon by the customs in

completing the adjudication, therefore, if that statements given by those

two persons were not subjected to cross-examination or not made

available for such cross-examination, those statements cannot be relied

upon and if those statements are ignored, there could be no further

material against the petitioner, hence, the petitioner can be exonerated

from the adjudication proceedings.

12.However, the respondents completing the adjudication, has

passed an order, dated 13.12.2019, issued on 23.12.2019, imposing the

said penalty, which has already been imposed in the earlier adjudication

order on the six persons including the petitioner, therefore, challenging

the said order of adjudication, dated 13.12.2019 issued on 23.12.2019,

the petitioner has filed the present writ petition.

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13.Heard Mr.B.Kumar, learned Senior Counsel appearing for the

petitioner. He has raised the main ground that, once, the two persons,

namely, Siddique Gani and Mohammed Ibrahim, were not made

available for cross-examination to the petitioner during the adjudication

process, it will be a fatal to the entire proceedings, therefore, the entire

adjudication order, which is impugned in the writ petition has to be set

aside.

14.In alternative, the learned Senior Counsel would contend that,

if at all the two persons, whose cross-examination was not made

possible and whose statements were main reasons for issuing show

cause notice and to do the adjudication against the petitioner, atleast the

statements obtained from the two persons, can be ignored and in this

regard, if at all any other materials available for the customs to proceed

against the petitioners, without referring to the statements given by

those two persons, for the said purpose, the matter can be remitted back

to the customs for re-consideration, after setting aside the impugned

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order, he contended.

15.In support of these contention, the learned Senior Counsel has

relied upon the following decisions:

1.2005 (10) SCC 634 (Lakshman Exports Ltd., v. Collector of Central Excise)

2. 2016(15) SCC 785 (Andaman Timber Industries v.Commissioner of Central Excise)

3.1961 (1) SCR 933 (Amba lal vs. Union of India)

4.W.P.Nos.2383 to 2386/2002, High Court, Madras.

(V.Bhaskaran vs.The Special Director, Enforcement Directorate, New Delhi)

5.1989 (4) SCC 418 (N.Meera Rani v.Government of Tamilnadu and another)

16.By relying upon these decisions, the learned Senior Counsel

would contend that the cross-examination is an important facet of any

enquiry or adjudisecation, if the persons, whose statements is heavily

relied upon by the adjudicating authority or a prosecution, and if such

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an opportunity of cross-examination is not given to the accused or

noticee, then, it will be a fatal to the entire adjudication process,

therefore, on that ground itself, which have been clearly reiterated in

those cases cited supra, the impugned adjudication order is liable to be

interfered with, the learned Senior Counsel contended. He would also

submit that as against the earlier adjudication order, dated 20.02.2018,

when writ petition was filed by the same petitioner, this Court, by order,

dated 18.12.2018 has made a clear observation that, the authorities, that

is, the customs department should have considered the request of the

petitioner for allowing him to cross-examine the two persons. By

making this observation, the learned Judge in the writ order, dated

18.12.2018, has given a direction that the respondents will first consider

the petitioner's request for cross-examination by taking into account the

facts containing in this case and pass a speaking order and only

thereafter, take up the matter on merits.

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17.Therefore, the impact of the direction given by the writ Court

in the earlier round of litigation is to see that the petitioner would get

chance of cross-examining the two witnesses, whose statements are very

crucial in the adjudication process and based on which only, the

petitioner's role has been projected by the customs. In absence of such

an opportunity of cross-examining the two persons, certainly, the whole

process would get vitiated, hence on the sole ground, the impugned

order is liable to be interfered with and for the said purpose only, instead

of filing an appeal against the impugned adjudication order, the

petitioner has chosen to file this writ petition as a denial of cross-

examination is nothing but a violation of the personal lilberty and

protection guaranteed under Article 20 and 21 of the Constitution of

India.

18.Making all these submissions, the learned Senior Counsel

would contend that the impugned order is liable to be set aside and the

writ petition is to be allowed.

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19.Per contra, Mr.B.Vijay Karthikeyan, learned Senior Standing

Counsel appearing for the respondent customs has made submissions

that the entire smuggling operations was unearthed by the customs

department, where, there has been a link between each of the parties and

initially, though adjudication went on only against three persons,

namely, Siddique Gani, Sheik Fareed and Karthikeyan, the customs had

got material to show that there has been involvement of the petitioner

and others in the entire gamut of smuggling issue. Therefore, a show

cause notice was issued against the petitioner, as before which he

obtained anticipatory bail avoiding arrest and the very said show cause

notice, dated 08.09.2017 issued against the petitioner itself was under

challenge in W.P.No.26000 of 2017, where, an undertaking affidavit was

filed by the customs that the customs department undertake to

adjudicate the show cause notice, dated 08.09.2017, without being

influenced by the findings rendered in order in original, that is, the

adjudication order, dated 31.03.2017, but based upon the available

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materials and statement recorded under the provisions of the Customs

Act.

20.Accordingly, without being influenced by the said adjudication

order, dated 31.03.2017 only based on the other available materials as

well as the statements obtained by the customs under the provisions of

the Act, the adjudication went on, where, a speaking order dated

20.02.2018 also was passed by the customs to reject the claim of the

petitioner for giving a chance of cross-examination of the co-accused

and on that date the adjudication order itself was passed, however, that

was again challenged by the petitioner before this Court in the second

round of litigation, that is, in W.P(MD).No.10345 of 2018.

21.In the said writ petition, only a direction was given by the writ

Court by order, dated 18.12.2018, that the customs will first decide the

request of the petitioner for cross-examination. The said direction in

fact, has been complied with by the customs department as they have

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decided to give the chance of cross-examination of the two persons as

sought for by the petitioner and accordingly, summons were issued to

those two persons, wherein in respect of Siddique Gani, summons have

been served, however, in respect of Mohammed Ibrahim, the summon

could not be served as no such an address and no such person is

available in the said address. Because of the said reason, the cross-

examination though was given, it could not be utilised, as those two

persons had not turned up for the summons.

22.He would further submit that merely because of the chance of

cross-examination could not be given to the noticee, whether the entire

adjudication process would be a fatal one or not is concerned, the law is

well settled in this regard.

23.The learned Standing Counsel would further submit that

insofar as the said question is concerned, number of decisions have

come from various High Courts as well as the Hon'ble Supreme Court

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and in this context, the learned Standing Counsel appearing for the

respondent customs has relied upon the following decisions:

1.2003 (153) E.L.T. 244 (SC) [Union of India v. G.T.C. Industries Ltd.]

2. 2021 (377) E.L.T. 13 (Madras) [Stalin Joseph v. Commissioner of Customs, Airport, Chennai]

3. 2018 (2) CWC 588 [Roshan Overseas v. Commissioner of Customs, Tuticorin]

4. Hon'ble High Court of Madras at Madurai Bench (DB) in W.A.(MD)No.1146 of 2018

5. 2015 (325) E.L.T. 250 (Allahabad) [Ashish Kumar Chaurasia v. Commissioner, CESTAT]

6. 2016 (333) E.L.T. A231 (SC) [Ashish Kumar Chaurasia v. Commissioner, CESTAT]

7. 2015 (321) E.L.T. 604 (Delhi) [Mahender Jain v. Commissioner of Customs (Import & Export)]

8. 2015 (323) E.L.T. A187 (S.C.) [Mahender Jain v. Commissioner of Customs (Import & Export)]

9. 2021 (376) E.L.T. 46 (Telangana) [Mohammed Muzzamil v. Central Board of Indirect Taxes&CUS]

10. 2019 (367) E.L.T. 759 (M.P.) [Kirit Shrimankar v. Commissioner of CGST & Cental Excise]

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24.By relying upon these decisions, the learned Standing Counsel

would contend that the opportunity of cross-examination as sought for

by the petitioner, though had been given by summoning the two

persons, who have to be cross-examined by the petitioner side, since

one of those two persons have not received the summons, as his

whereabouts is not known and had not turned up, as one of the persons

having received the summon, did not turn up. Therefore, that situation

cannot lead to a fatality of the case as projected by the petitioner side,

therefore, the learned Standing Counsel would canvass the point by

relying upon the afore-cited judgments that, the adjudication process

went on against the petitioner is sustainable.

25.Moreover, the learned counsel would further contend that as

against the order impugned, that is, adjudication order, if at all the

petitioner is aggrieved, he can very well prefer an appeal, instead of

preferring the appeal, he cannot come forward to invoke the writ

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jurisdiction once again as the issue involved in the entire gamut, which

culminated in the impugned adjudication order can be gone into in

detail only by next fact finding authority, who is none other than the

Appellate Authority, and therefore, without exhausting such an appeal

remedy, the petitioner may not come forward to make a plea that the

impugned order can be agitated before this Court invoking the extra-

ordinary jurisdiction of this Court under Article 226 of the Constitution

of India.

26.Therefore, on this ground alone, the plea raised by the

petitioner is liable to be rejected and the writ petition is liable to be

dismissed, he contended.

27.I have considered the said rival submissions made by the

learned counsel appearing for the parties and have perused the materials

placed before this Court.

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28. Instead of preferring an appeal against the impugned

adjudication order, why the petitioner has chosen to file writ petition is

the question, however, the same is answered by the learned Senior

Counsel appearing for the petitioner that, the chance of cross-

examination of the two crucial persons, whose statements have been

mainly relied upon by the customs, since has not been given to the

petitioner, that will lead to the fatality of the case, therefore, such a

denial of cross-examination amounts to violation of the fundamental

rights of the petitioner guaranteed under Article 20 of the Constitution

of India, therefore, on that ground alone, the impugned adjudication

order is liable to be set aside.

29.In support of the said contention, the learned Senior Counsel

as stated supra, relied upon some of the judgments, where, in the case of

V.Baskaran v. Special Director of Environment Directorate, New

Delhi in W.P.Nos.2383 to 2386 of 2002, dated 24.06.2005, he has relied

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upon the following observation made by the learned Judge:

“69.I am inclined to hold that it is certainly open to the authorities to gather information for their own satisfaction pursuant to their investigation from any source. Such sources need not be disclosed. There is of course no duty to produce such persons for cross examination. There is also no need to produce anyone at the stage when the individual is called upon to show cause against the proposed proceedings. But when once the enquiry commences and if the adjudicating authority ultimately proposes to rely in his final order on the statement of any witness and would ultimately render the finding on such reliance on the evidence of the witness against the accused, the enquiring authority cannot be permitted to rely on such evidence or statement unless he has been produced for cross- examination.

70. I agree that the accused cannot be permitted to stall the enquiry if a witness is not produced. His right will be only to comment

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about the non-production if in the order of adjudication, reliance is placed upon the statement of a witness not produced for cross- examination. Appellate authorities are bound to reject such material. To hold otherwise, namely, that the Department can rely on statements of persons not produced for cross-examination in spite of demand by the accused, would amount to gross injustice and violation of basic concept of fairness. The adjudicating authority should ignore such material while passing final order.”

30.That apart, the learned Senior Counsel heavily relied upon the

judgment of the Hon'ble Supreme Court in Andaman Timber case

reported in 2016(15) SCC 785, where, he relied upon the following

paragraphs:

“6.According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of

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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

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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

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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.), Commissioner v. Andaman Timber Industries Pvt. Ltd.] 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.”

31.In the said case of Andaman Timbers Industry is concerned,

the Hon'ble Supreme Court, no doubt, has observed that not allowing

the Assessee to cross-examine the witness by the adjudicating authority,

though the statements of those witnesses were made the basis of the

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impugned order is a serious flaw, which makes the order nullity in as

much as it amounted the violation of principles of natural justice,

because of which, the Assessee was adversely affected, whether the said

situation is prevailing in the present case is the question.

32.In this context, the statements obtained by the customs

department from various persons under Section 108 of the Customs Act,

have been relied upon by the customs side. In this context, the original

records were produced before this Court, where the learned Standing

Counsel was able to demonstrate that, it is not only on the basis of the

statement given by the Siddique Gani, but also on the basis of the

statement given by one Sheik Fareed, whose statement was recorded on

28.10.2015 and also the statement given by Karthikeyan, dated

18.01.2016, the connection of the petitioner with regard to the

smuggling episode has been established prima facie, he contended.

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33.That apart, the statement of Siddique Gani, dated 16.04.2016,

recorded under Section 108 of the Customs Act also has been relied

upon.

34.Assuming that in the statement of Siddique Gani or

Mohammed Ibrahim, as these two persons, according to the petitioner,

had implicated in their statements the role of the petitioner and those

statements are eschewed even then, whether the customs can maintain

the adjudication and to come to a conclusion that the petitioner is liable

to be imposed the penalty under the provisions of the Customs Act, has

to be gone into.

35.In this context, if we look at the adjudication order, it is not on

the basis of the mere statement given by the said Siddique Gani as well

as the Mohammed Ibrahim, the petitioner has been implicated. The

petitioner, even in his statement states about the knowledge of these

persons including Siddique Gani and Mohammed Ibrahim. Phone calls

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were emanated from the mobile number of the petitioner to Karthikeyan

or Sheik Fareed, who were the drivers or accomplice to the driver on the

particular date, when the seizure taken place.

36.There has been a huge haul of smuggled gold and this is

evidence that there has been a big smuggling activity went on, which

has been correctly unearthed by intercepting the smuggling vehicle on

the particular date, based on the proper tip received from the DRI by the

customs.

37.Moreover, insofar as the legal position is concerned, whether

the denial of opportunity of cross-examination is the fatality to the case

is concerned, as referred to above, nearly about ten decisions have been

cited by the learned Standing Counsel appearing for the customs. In

2003(153) ELT 244 SC in Union of India v. CTC Industries Limited,

the Hon'ble Supreme Court has held as follows:

“10.Learned Senior Counsel appearing for

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the Union of India Mr.Jaideep Gupta submitted that no statement was taken from Shri Sailo by the authorities nor did the authorities rely upon any statement of Shri Sailo against GTC. That it was not a case where the evidence had been produced by the appellant in support of its case and no opportunity of cross-examination was given to the other side. Notice could not be issued to Shri Sailo under Section 14 of the Act to compel his attendance and to make a statement coupled with the opportunity to the GTC to cross-examine him. That Shri Sailo being a co-noticee, could not be compelled to appear as witness against himself. Non-summoning of a co-noticess for the purpose of cross-examination by another co-noticee did not amount to breach of Principles of Natural Justice. In the alternative, it was submitted that in a case based on violation of Principles of Natural Justice, it is to be shown that some prejudice was caused to the aggrieved person because of the alleged breach of violation of Principles of Natural Justice. It was vehemently contended that the Collector in coming

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to the finding that the GTC was the real manufacturer and the NET its front company did not rely upon the statement of Shri Sailo. In coming to this finding the Collector had primarily placed reliance on the statements of other persons. ...........

16.An adverse finding could not have been recorded against the GTC by relying upon the oral submissions made by a co-noticee at the hearing without any supporting material on record, providing die opportunity to GTC to meet the same.

17. For the reasons stated above, the appeal is accepted in part and directions issued by the High Court to the Collector to summon Shri Sailo, Liantilinga and Lalchungunga for necessary examination and to afford an opportunity to the GTC to cross-examine them are set aside. But the order of the High Court setting aside the order of the Collector is sustained on the ground that the Collector had erred in placing reliance on the submissions of Shri Sailo. The direction issued by the High Court that the proceedings shall be taken

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by the officer other than the one who had made the adjudication order shall also stand set aside. Otherwise also this direction has become infructuous with the passage of time. The incumbent Collector is directed to decide the matter afresh on the basis of any other material obtained and also placed on record for the purpose duly granting reasonable opportunity to GTC to produce evidence in rebuttal."

38.In 2021 (377) ELT 123 (MDS), a Division Bench of this Court

in the matter of Stalin Joseph v. the Commissioner of Customs(Airport

Chennai) has held as follows:

“30.With regard to the plea that the appellant should be permitted to cross examine every person, the Adjudicating Authority, in our view, rightly pointed out that such request has to be considered based on facts and circumstances of each case. After referring to the factual matrix, the Adjudicating Authority concluded that

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the request for cross examination was a mere ploy and to scuttle and delay the adjudication process. The conduct of the appellant is clearly brought out in the adjudication order that he has been evading the summons and absconding and not availing the opportunity of personal hearing. After elaborately discussing all the factual matrix, the Adjudicating Authority held that the other co-noticees have not retracted their statements given under Section 108 of the Act and the plea made by the appellant for cross examination is only for dragging on the proceedings and therefore, there are enough and valid grounds to deny such request. The facts, which have been brought out by the Adjudicating Authority in the Order-in-Original, clearly expose the appellant's role.

31.We agree with the finding of the Adjudicating Authority that the plea raised by the appellant demanding cross examination is only with a view to drag on the matter. In fact, in the reply/representations, which the appellant had

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sent, he has not been specific as to why he requires cross examination because, the appellant has not brought out any independent facts or evidence as his defence to the allegation made against him in the show cause notice. The reply is a bald denial of the entire allegations stating that the appellant is not involved in the import of the said items. However, during the course of investigation and while considering the entire matter, the Adjudicating Authority has been able to bring out the facts as to how the appellant has impersonated himself, opened bank account in the name of a fictitious person, remitted customs duty by effecting cash payment in dummy bank accounts, opened in the name of an Enterprise and one Shri Rakesh Upadhaya. Therefore, we are of the view that the facts and circumstances of the case would clearly show that the request for cross examination is devoid of merits, lacks bonafide and rightly denied by the Adjudicating Authority.

32.It was argued before us that the

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appellant has been framed by the investigating agency as well as the Department on the ground that he had lodged a complaint before the CBI and certain officers of the DRI have been charged. Therefore, the appellant would seek to argue that the proceedings are vitiated on account of mala fide. If this is the case of the appellant, then there should be specific allegation against the named officers against whom, he alleges mala fide or bias. Admittedly, no such officer has been made a party to the writ petition. Therefore, the plea of mala fide exercise of power has to be definitely rejected.

33.So far as the decision in the case of Vulcan Industrial Engineering Co. Ltd., (supra) is concerned, the case was on a different factual background, where the request for cross examination was never decided by the Adjudicating Authority and the Order-in-Original was passed whereas, in the case on hand, the request for cross examination has been considered and a decision has been rendered by

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the Adjudicating Authority in the Order-in- Original, which we find to be just and proper. Therefore, the said decision is of no assistance to the case of the appellant.

34.In the case of Mahek Glazes Pvt. Ltd.

(supra), the Court did not express any opinion on the issue as to whether the petitioner therein had a right to seek cross examination in the facts of the said case and the Court went to the extent of observing that it refuses to comment on the petitioner's insistence for cross examination or the authority's reluctance to grant it. Further, the said decision was relied on to state that the request of cross examination should have been decided separately and not along with the Order- in-Original. This proposition cannot be canvassed by the appellant, as the Adjudicating Authority has clearly brought out the conduct of the appellant at the stage of the investigation and even after the show cause notice was issued. The appellant did not cooperate with the adjudication process, was unsuccessful in obtaining an order

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of Anticipatory Bail and he was absconding. More importantly, the statements, which were given by the other co-noticees, which have been referred to by the Department, have not been retracted and remained as such. Therefore, the Adjudicating Authority was right in observing that the request for cross examination was a ploy and only to drag on the proceedings. That apart, if the co-noticees, who were examined and who have given statements which clearly brings out the role of the appellant, then the appellant should set up his defence by placing reliance on some evidence available with him and establish that on account of the defence available with him, his request for cross examination is justified.

35.We have perused the replies given by the appellant to the show cause notices and all that we find is a simple denial of his involvement. The fact position opens a pandora-s box, which clearly brings out the deep rooted involvement of the appellant in the entire process. Therefore, the decision in Mahek Glazes Pvt. Ltd. (supra), is

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clearly distinguishable.

36.The decision in the case of Andaman Timber Industries (supra) and Ummer Abdulla (supra) are cases, which arise out of an order passed by the Tribunal, which were challenged by filing an appeal before the High Court, where the Court decided the substantial questions of law. However, in the instant case, the appellant had filed a writ petition. Therefore, the questions of law, which have been decided in those cases were done after the Tribunal, being the last fact finding authority, had given a conclusive finding on facts and the Court proceeded to decide the substantial questions of law raised before it. Therefore, the appellant cannot press into service those decisions to support his case.”

39.Another Division Bench of this Court in 2018 (2) CWC 588 in

the matter of Roshan Overseas v. the Commissioner of Customs, has

held as follows:

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“12.On the question of maintainability of the writ petition, it is to be noted that in this case, the Adjudicating Authority passed the impugned order admittedly after issuing the show cause notice and also affording an opportunity of personal hearing to the writ petitioner. Therefore, it cannot be contended that the Adjudicating Authority violated the principles of natural justice. However, it is claimed by the writ petitioner that not giving an opportunity to cross-examine the witnesses also amounts to violation of principles of natural justice. The question as to why such opportunity was not given to the petitioner, certainly is not a simple question of law and on the other hand, it is a question of fact, which is answered by the Adjudicating Authority in the impugned order itself. Whether the reasons stated by such authority in not providing an opportunity to cross-examine are sustainable or not is the question that has to be considered and answered only by re-appreciation of all the facts and circumstances, which, in our view, has to be done only by the next fact finding

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authority, namely, the appellate authority. Therefore, we are not convinced to appreciate the contention of the writ petitioner with regard to maintainability issue. It is useful to note at this juncture, an observation made by the Hon'ble Apex Court in Panjab Roadways vs. Panja Sahib Bus Transport Company reported in (2010)5 SCC 235 at paragraphs 37 and 38, as extracted hereunder:-

“37.Article 226 of the Constitution of India confers extraordinary jurisdiction on the High Court to issue high prerogative writs for enforcement of fundamental rights or any other purpose, the powers are of course wide and expansive but not to be exercised as an appellate authority re-

appreciating the finding of facts recorded by a tribunal or an authority exercising quasi-judicial functions. The power is highly discretionary and supervisory in nature. Grant of stage carriage permits is primarily a statutory function to be discharged by the RTA exercising powers under Section 72 of the Act and not by the High Court exercising the constitutional powers under Article 226 or 227 of the Constitution of India.

38. A writ court seldom interferes

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with the orders passed by such authorities exercising quasi-judicial functions, unless there is serious procedural illegality or irregularity or they have acted in excess of their jurisdiction.........”

13.It is well settled that in a case involving fiscal nature, availing of statutory appellate remedy has to be first exhausted and hence, the party cannot come to this Court directly and file a petition under Article 226 of the Constitution of India. This view is already expressed in very many decisions out of which we quote few decisions which are as follows:-

“1) M/s.Nivaram Pharma Private Limited rep.by its Director Sardarmal M.Chordia, Madras -vs- The Customs, Excise and Gold (Control) Appellate Tribunal, South Regional Bench, Madras and others reported in (2005) 2 MLJ 246(DB)

2) United Bank of India -vs- Satyawati Tondon and others reported in (2010) 8 SCC 110

3) Raj Kumar Shivhare -vs- Assistant Director, directorate of Enforcement and Another

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reported in (2010) 4 SCC 772.

4) Metal Weld Electrodes -vs- CESTAT, Chennai reported in 2014 (299)ELT 3 DB.”

14.Therefore, we are of the considered view that the filing of the very writ petition itself against the order of the Adjudicating Authority is not maintainable, as the appellant/writ petitioner is having statutory and efficacious appellate remedy before the appellate Tribunal, in this case, CESTAT.”

40.In yet another Division Bench judgment in W.A(MD).No.1469

of 2018, dated 30.01.2019 of this Court in S.Rajendran v. the The Joint

Commissioner of Customs(Preventive) and others it has made the

following observation:

“28. In the present case, the 1st respondent has relied on the statements of appellant and co-accomplices while passing Order in Original No.TCP/Cus.PRV/JTC/055-17, dated 07.12.2017. They are his employees and partners and partner's brother, who are either absconding or are not traceable and cannot be produced for cross

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examination.

29. They have reportedly retracted their statements recorded under Section 108 of the Act though some of them have withdrawn their retractions and have stated that their original confessions to be true in their later statements. From the order impugned in the writ petition, it appears that certain admissions appears to have been made by the appellant relating to his involvement in which case there would be no necessity to cross examine the co-notices. We do not however have the documents before us. Even if produced, we would have refrained from dissecting them while examining the order of the Single Judge.

30. Therefore, denial of cross examination of co-

accomplice who have allegedly retracted their statements is of no consequence as far as the appellant is concerned.

31. Further, in a quasi judicial proceeding, a quasi judicial authority is not governed by strict rules of evidence. Charge/case can be proved based on preponderance of probability and other available evidences and documents.

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32. We are of the view that in the peculiar facts of the case, it was for the appellant to produce such co- accomplice and elicit their statements as they are not unknown or strangers to the appellant as they were working under him.

33. An order of a quasi judicial officer is sustainable if the finding arrived therein are based on preponderance of probability and other overall evidences and documents on record. Whether the finding arrived in the impugned order is solely based on the statements of co-accomplices or based on preponderance of probability or not is something which can be examined only before the Appellate Commissioner and not in a writ proceeding.

34. Scope of writ petition and the extent to which courts can interfere under Art. 226 is limited. The appellant should therefore explore options before the Appellate Commissioner and place all legal and factual submissions there. The remedies sought for by the appellant before this Court is available to him before the Appellate Commissioner.

35. We would not like to influence the Appellate Commissioner one way or the other on merits should the

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appellant choose to opt to question the impugned order of the 1st respondent.

36. The Appellate Commissioner can on proper examination of records can come to a just conclusion. As the jurisdiction to interfere is very limited, we would not like to pass orders on merits particularly, in view of the statements which appears to have been given by the appellant before the 2nd respondent during investigation.

37. In view of the above conclusion, we are inclined to dismiss the writ appeal. Appellant is given liberty to file an appeal before the Appellate Commissioner within two months from the date of this order. Accordingly, this writ appeal is dismissed. No costs.”

41.Similar view has been taken by the Allahabad High Court

reported in 2015(325) ELT 250(Allahabad) in the case of Asish Kumar

vs. Commissioner of CESTAT, the said judgment was upheld by the

Hon'ble Supreme Court in 2016 (333) ELT(A) 231(SC).

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42.In 2021(376)ELT46(Telangana), the High Court for the State

of Telengana at Hyderabad has taken the following view:

“35.Thus there is no doubt that where a plea of violation of principles of natural justice by denying a party an opportunity to cross-examine witnesses is raised in proceedings under the Customs Act, 1962 or similar legislation, the question of prejudice suffered to such party by such denial has to be gone into. If there is no prejudice caused by such denial, no relief can be granted to him. The issues arising in this case are thus answered as above.

36. Having perused the impugned order passed by the 2nd respondent, prima facie, it appears to us that the basis for levying penalty against the petitioners were their statements recorded under Section 108 of the Customs Act, 1962, wherein certain confessions appear to have been made by them implicating themselves in the smuggling of cigarettes, which was subject matter of enquiry.

37. Therefore, we are of the opinion that no

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prejudice has been caused to the petitioners by the action if the 2nd respondent in denying an opportunity to them to cross-examine the other persons who had implicated them in the said act of smuggling.

38. We have also noticed that the petitioners were admittedly given a show-cause notice on 4-4-2016; they gave response there to on 2-3-2017 and 7-10-2019; and and their Counsel was also given a personal hearing on 2-3-2017 and 9-10-2019. So the contention of the petitioners that there were violation of other principles of natural justice, cannot also be sustained.

39. In this view of the matter, we are not inclined to entertain this Writ Petition.

40. We accordingly dismiss the Writ Petition at the admission stage as not maintainable, giving liberty to the petitioner to avail the alternative remedy of Appeal under Section 129A of the Customs Act, 1962.

41. We clarify that we have not expressed any opinion on the merits of the claims of the petitioners

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and whatever observations have been made by us are only for the purpose of disposal of this Writ Petition and cannot be treated as conclusive; and if any such appeal is preferred by the petitioners, the same shall be decided by the Appellate Authority uninfluenced by any observations made by us in this order. No order as to costs.

42. Consequently, miscellaneous petitions, pending if any, shall stand closed.”

43.Insofar as the law declared by the Hon'ble Supreme Court in

Andaman Timber case cited supra, which has been taken into account by

the Division Bench of this Court in Stalin Joseph case cited supra,

where the Division Bench at paragraph No.36 of their order, as quoted

hereinabove, has held that, since the Tribunal is the ultimate fact finding

authority unless the party goes to the Tribunal and get a final verdict the

question of law as to whether the denial of cross-examination or no

chance of cross-examination as sought for by the noticee/petitioner

concerned cannot be decided and therefore the decision in the case of

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Andaman Timber Industry cannot be applicable to the said facts of the

case.

44.If the said principle of the Division Bench in Stalin Joseph

case is applied to the present facts of the case, as here also without

going to the appeal to the Tribunal, since the petitioner has approached

this Court by filing the present writ petition, the principle laid down in

Andaman Timber case cannot be made applicable in the present case at

the present circumstances.

45.Moreover, while giving direction in the earlier round of

litigation by the learned Judge, in W.P.(MD)No.10345 of 2018, dated

18.12.2018, the learned Judge in paragraph No.9 of the order has

observed that, of course by taking into account the decision reported in

2006 (194) ELT 219, that, “one cannot insist on the right of cross-

examination and one cannot demand cross-examination as a matter of

right, it means that, a demand can be made and it will have to be

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considered.”

46.By making these observations only, the learned Judge had

given a direction to the customs to consider the first request of the

petitioner for cross-examination by passing a speaking order.

47.Therefore, the request of the petitioner, in fact, having been

considered was accepted by the customs and summons were issued to

those two persons and among them, one had received summons and did

not appear, another's whereabouts was not known.

48.In this context, it can also be viewed from this angle that, if at

all the petitioner is interested for having a complete adjudication to get

justice and if he was very particular that the statement given by those

two persons cannot be relied and therefore, in order to retract the same,

they have to be cross-examined, the petitioner could have also assisted

the adjudicating authority in ensuring the presence of those two persons,

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who are known to the petitioner.

49.Therefore, this kind of circumstances can also be viewed that

one co-noticee, while facing the adjudication process, the another co-

noticee, whose presence is required for cross-examination, is by

voluntary action being absent of such process of cross-examination,

therefore, it can be construed that there had been a nexus between the

parties as the two persons, who were sought to be cross-examined are

not alien to the petitioner or they are not the independent witnesses

projected by the customs authorities.

50.This position also had been considered in number of cases

cited supra, and more over, consistent view have been taken by various

Courts including Hon'ble Supreme Court in these matters that the mere

denial of cross-examination itself cannot be treated as a fatal to the

entire proceedings.

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51. Here in the case in hand such a denial has not been made by

the customs, though such chance was given and a demand made

sincerely by the customs authorities, the co-noticee, who already

suffered with the punishment of penalty in the earlier adjudication order

have chosen to keep away from the proceedings as they did not want to

subject themselves to be part of the proceedings for making them

available for cross-examination for the reasons best known to them.

52.Therefore, in these circumstances, this Court is unable to come

to a conclusion that there has been a failure on the part of the customs in

securing the presence of witness for cross-examination nor it can be

stated that because of those two persons have not been cross-examined,

the entire adjudication proceedings is vitiated. The reason being that, it

is not only based on these mere statement made by those two persons,

but also based on the statement given by other persons as has been

discussed above, the customs set up their case against the petitioner.

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53.In this context it is further to be noted that, at the time of

giving undertaking affidavit before this Court in the earlier round of

litigation, that is, in W.P.No.26000 of 2017, what has been undertaken

by the customs authorities is that, they will not be influenced by the

findings rendered in the earlier adjudication order, dated 31.03.2017

against three persons, but based upon the available material and

statement recorded under the provisions of the Customs Act, 1962, they

will conduct the adjudication.

54.Therefore, whatever the statements, obtained under the

provisions of 1962 Act, which includes, the statements obtained from

them under Section 108 of the Customs Act can very well be relied

upon, which they have already given by way of undertaking before this

Court in the first round of litigation, where also, after having taken note

of the same only, the further proceedings went on. Therefore, that can

also be one of the reason, where, the customs can make use of the other

statements given under Section 108 of the Customs Act for the purpose

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of completing the adjudication.

55.However, all these aspects can be gone into in detail by the

further fact finding authority, that is, Appellate Authority/Tribunal

before whom, if the petitioner make appeal, then all these points can be

conveniently canvassed by the petitioner's side and once a quietus is

given by rendering findings on the factual aspects by the Appellate

Authority/Tribunal, then only, by considering the question of law, if any

involved in this case, ultimately, this Court can give a finding on the

legal aspect. This has been in fact emphasised by the Division Bench

judgment of this Court, referred to above in Stalin Joseph case cited

supra.

56.Therefore, there could be no plausible reasons on the part of

the petitioner to project that the non-cross-examination of the two

persons, despite the attempt being made in this regard both by the

petitioner as well as the customs authorities, will be a total fatal to the

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entire adjudication proceedings, therefore, adjudication order is vitiated.

57.In that view of the matter, this Court feel that the petitioner can

very well agitate the issue as against the impugned order by preferring

an appeal where all these issues factually as well as legally can be

projected and as the final fact finding authority the Appellate

Authority/Tribunal can go into these aspects and render a finding.

58.In view of the afore-stated discussions, this Court feel that, the

challenge made against the impugned order on the ground urged by the

petitioner is unsustainable at this juncture, therefore, the writ petition

fails, hence, it is liable to be rejected.

59.In the result, the writ petition is dismissed. However, it is open

to the petitioner to prefer an appeal before the Appellate Authority and if

any such an appeal is filed before the Appellate Authority, such

Appellate Authority shall decide the appeal on merits and in accordance

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with law, where, whatever findings or observations given by this Court

in this order shall not be taken into account or those findings and

observation shall not influence the Appellate Authority, who can take a

decision independently.

60.With these observations, this writ petition is dismissed.

However, there shall be no order as to costs. Consequently, connected

miscellaneous petitions are closed.

28.05.2022

Index: Yes/No Internet: Yes

PJL

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To The Joint Commissioner of Customs (Preventive), O/o.Commissioner of Customs, No.1, Williams Road, Cantonment, Tiruchirappalli-620 001.

______________ Page No.61 of 62 https://www.mhc.tn.gov.in/judis W.P.(MD)No.3009 of 2020 Rajkumar Gowthaman v. The Joint Commissioner of Customs(Preventive), Trichy.

R.SURESH KUMAR, J.

PJL

Order made in W.P.(MD)No.3009 of 2020

28.05.2022

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