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CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 12217 OF 2017
Shri. Bipin Badani. ..Petitioner
Vs.
1. Union of India, through the Secretary, Ministry of Finance, 2. The Commissioner of Customs. ..Respondents
Mr. Karan Adik with Ms.Maya Majumdar, for the Respondents.
JUDGMENT
1. This petition under Article 226 of the Constitution of India is filed praying for the only relief that the order-in-original dated 6 June 2017 passed by the Commissioner of Customs, Pune, be quashed and set aside.
2. At the outset, it may be observed that an objection was raised on behalf of the respondent that the petitioner has a remedy of filing an appeal against the order-in-original as provided for under Section 129A of the Customs Act (for short ‘the Customs Act’) before the Customs, Excise and Service Tax Appellate Tribunal (for short ‘CESTAT’). However, the 2023:BHC-AS:36557-DB petitioner would submit that the petitioner ought not to be relegated to such statutory remedy as the impugned order involves breach of the principles of natural justice, as the petitioner was not provided an opportunity to cross examine the persons whose statements came to be recorded in the course of the investigation. In supporting such contention, learned Counsel for the petitioner has referred to the provisions of Section 138B of the Act which provides for relevancy of statements under certain circumstances.
3. Before, we proceed to consider the rival contentions, we may refer to the relevant facts.
4. On 29 March 2000 a show cause notice was issued to the petitioner demanding differential customs duty of Rs.2,45,83,219/- under Section 28 of the Customs Act. The petitioner had invoked the jurisdiction of the Settlement Commission. On 20 February, 2001, the Settlement Commission admitted the petitioner’s application for settlement of the case. By an order dated 17 October 2003, the Settlement Commission rejected the petitioner’s application on the ground that it did not have jurisdiction to entertain the application. The petitioner challenged such order of the Settlement Commission before this Court in Writ Petition No.2 of 2004. A Division Bench of this Court by an order dated 21 July 2005 disposed of the said writ petition remitting the case to the Settlement Commission inter alia observing that the Settlement Commission has jurisdiction to entertain the application filed by the petitioner. The Revenue, however, being aggrieved by the said orders passed by this Court, had approached the Supreme Court against the order dated 21 July 2005. The Supreme Court by its order dated 19 August 2015 dismissed the revenue’s appeal inter alia observing that the High Court had merely remitted the case to the Settlement Commission and therefore, no interference is called for. It was, however, observed that if the petitioner did not approach the Settlement Commission within three months from the said order, his right to approach the Commission will stand forfeited and that the orders of the Settlement Commission rejecting the petitioner’s application, shall stand revived.
5. It appears from the averments as made in the petition that the petitioner could not approach the Settlement Commission and consequently by virtue of the orders passed by the Supreme Court, the issue before the Settlement Commission as raised by the petitioner, has attained finality.
6. In this view of the matter, the Department had taken up the show cause notice dated 29 March 2000 for adjudication. The petitioner has averred that a reply to the show cause notice was submitted by his Advocate’s letter dated 15 February 2017. On perusal of the petitioner’s Advocate’s letter, it clearly appears that the petitioner has not at all addressed the principal allegations as made in the show cause notice, namely, that there was concealment of ball bearings in the declared consignment of Damar Batu by the petitioner when the investigation revealed that the cargo declared by the petitioner as Damar Batu, imported vide Bill of Entry No.000479 dated 5 October 1999 on being examined at Container Freight Station Pimpri, Pune, in the presence of Mr.Deepak Bhargawa, CHA, proprietor of M/s. Avignon Shipping Agency and in the presence of two panchas, the investigation revealed that foreign origin ball bearings having estimated market value of Rs. 58,91,006/- were concealed in the consignment declared to be of ‘Damar Batu’ which was valued merely at Rs.57,074/-. The consignment was accordingly placed under seizure under the provisions of the Customs Act. The investigation further revealed that the address declared on the import documents by the petitioner as the proprietor of M/s. Sai Impex were found to be not correct. On such backdrop, summons were issued to the Clearing House Agent Mr.Deepak Bhargawa as also to the petitioner under Section 108 of the Customs Act. A statement was also recorded. The petitioner in his statement in connection with the seizure, is stated to have admitted conscious knowledge of willful mis-declaration and concealment of bearings under the guise of the consignment to be Damar Batu, imported on MS drums with an intention to smuggle the bearings of foreign origin and thereby to evade the Customs duty. There was further a statement of the petitioner recorded on 13 October 1999 under Section 108 of the Customs Act, in which he has stated that only the last two consignments he has imported vide Bill of Entries No.000479 dated 5 October 1999 and 000393 dated 16 September 1999 where the ball bearings were concealed in the cargo of Damar Batu and the goods were to be delivered to Mr. Nitin Mehta for a consideration of Rs.10 lakhs. The petitioner has also stated that he was involved in such activities amounting to smuggling of bearings, in consultation with Mr.Nitin Mehta who was an associate of Mr. Farooq of M/s. P & F Trading Co. of Singapore, the supplier of the said consignments. Further statements of the petitioner were recorded on 15 October 1999, 20 October 1999, 3 November 1999, and also on 22 November 1999 and 24 November 1999 under Section 108 of the Customs Act. It also appears that a statement of Mr. Shyamkant Laxman Kolpe, godown keeper was recorded, which revealed that the consignment of the foreign ball bearings belonging to the petitioner, were kept in the godown at Alandi on 29 September 1999 and thereafter, shifted to Geeta Bhawan at Alandi, during the night of 30 September 1999. Also there was involvement of Mr. Praveen V. Ladkat who was involved in packing of the bearings sizewise in cartons, whose statement was recorded under the Customs Act who stated that he was aware that the bearings were illegally imported.
7. It is on such statements of the petitioner, the Customs Preventive Unit, Pune had undertaken search at the godown at Gita Bhawan at Alandi which resulted into recovery of huge consignment of foreign original ball bearings packed in plastic woven bags, and the consignment in question was seized.
8. On such premise, after having substantial material to issue a show cause notice, a show cause notice dated 29 March 2000 was issued to the petitioner. As noted above, a reply dated 15 February 2017 was filed by the petitioner to the show cause notice and thereafter, an additional reply dated 9 March 2017 was filed by the petitioner, however, the petitioner did not deal with the merits of the show cause notice. Despite such clear factual position, what is insisted is that the petitioner be provided an opportunity to cross examine Mr. Shyamkant Laxman Kolpe, Godown keeper, Mr. Praveen V. Ladkat, who had taken the godown on lease and was involved in packaging of the ball bearings, as also supplying the ball bearings to Mr. Nitin Mehta, who was a dealer in ball bearings and the proprietor of M/s.Collective Trade Links, Mumbai, who was interested to purchase the consignment at discounted price.
9. On the above backdrop, the show cause notice was taken up for adjudication. The petitioner was given full opportunity in the adjudication of the show cause notice. The petitioner was represented by his counsel who had made detailed submissions in the adjudication of the show cause notice. After hearing of the parties, the Commissioner of Customs had passed a detailed Order-In-Original (O-I-O) dated 28 June 2017 which runs into 118 pages. We may observe that the adjudication order extensively considers the minutest of the facts and all material which had come on record in the investigation, including the attempts as made by the petitioner in his several submissions. The adjudicating officer has also referred to the proceedings before the Settlement Commission in the two writ petitions before this Court being Writ Petition No.3071 of 2003 and Writ Petition no.2 of 2004 respectively, as also the orders passed thereon, as also the orders passed by the Supreme Court dated 19 August 2015.
10. Considering the voluminous material which was on the record of the adjudicating officer, namely, the Commissioner of Customs, the adjudicating officer had come to a conclusion that the show cause notice was required to be confirmed against the petitioner, by ordering confiscation of the ball bearings as seized, as also to recover customs duties of Rs.2,45,83,219/- of the Customs Act alongwith interest as applicable under the provisions of Section 28AB of the Customs Act, as also ordered to recover personal penalty of the like amount from the petitioner under Section 112(a) and 112(b) of the Customs Act. The proceedings to the extent of demand of Customs duty amounting to Rs.23,54,600/- under Section 28(1) of the Customs Act, was also dropped. A penalty of Rs.4,97,737/- was imposed against the petitioner under Section 114A of the Customs Act.
11. It is on the above backdrop, the present petition has been filed raising the only contention that the impugned order-in-original needs to be set aside on the ground of breach of principles of natural justice, as an opportunity to cross examine three witnesses as noted above, was not granted to the petitioner. Reply of the Respondents
12. The petition hasbeen opposed on behalf of the respondentsby filing reply affidavit of Mr. V. S. Chaudary, Commissioner of Customs, Pune. At the outset, it is contended that the petitioner has a statutory remedy of filing an appeal before the Customs, Excise and Service Tax Appellate Tribunal (for short ‘CESTAT’) under Section 129A of the Customs Act, against the impugned order-in-original. It is also contended that the petitioner in order to avoid the pre-deposit of the 7.5% amount has taken a chance to file this writ petition, despite an efficacious alternate remedy available to the petitioner. It is contended that as set out in detail in the show cause notice, the person hearing these notices addressed to Mr. Shyamkant Kolpe and Mr. Pravin Ladkat, were not served and returned by the postal department. Also in the facts and circumstances, considering the provisions of Section 9D and 138B of the Customs Act, the request for cross examination of the witnesses was disallowed by recording detailed reasons. It was submitted that there was sufficient material as also the statements of different persons recorded, were found substantial corroboration in the adjudication of the show cause notice.
13. The reply affidavit states that in the facts and circumstances of the case, the charges were not only confirmed merely on the sole basis of the statements, but also the corroborative evidence which have been weighed and elaborately discussed by the adjudicating authority including the panchanama which was proved and the other voluminous material of illegal import and smuggling of the ball bearings, and there was no violation of the principles of natural justice by denying the cross examination in the facts and circumstances of the case. In supporting such contention, the respondents have placed reliance on the decisions in Surjeet Singh Chhabra Vs. Union of India & Ors.[1] to contend that the cross examination of the witness would not make any material difference in the facts and circumstances of the case. Further, reliance is placed on the decision of the Supreme Court in Telestar Travels Pvt. Ltd. Vs. Special Director of Enforcement[2]. In these circumstances, it is submitted that the petition deserves to be dismissed. Submissions of the Petitioner
14. Learned Counsel for the petitioner has limited submissions. The only contention as urged on behalf of the petitioner is that the impugned order is required to be held to be illegal as it is in breach of the principles of natural justice, on the ground that the petitioner was not permitted to cross examine the said three witnesses. It is her submission that the Commissioner of Customs could not have proceeded to pass the impugned order by not providing an opportunity to cross examine the said 1 (1997)89 ELT 646 (SC) 2 (2013(289) ELT 3 (SC)) three witnesses as law would mandate namely the provisions of Section 138B of the Customs Act. In support of her contention, reliance is placed on the decision of the Supreme Court in the case Andaman Timber Industries Vs. CCE, Kolkata-II[3], the decision of this Court in Nirmal Seeds Pvt. Ltd. Vs. Union of India[4], the decision of this Court (Goa Bench) in the case M/s. Novacare Drug Socialities Private Limited Vs. U.O.I. & Ors.5, the decision of Allahabad High Court in CCE, Meerut-I Vs. Parmarth Iron Pvt. Ltd.6, the decision of this Court in M/s. Larsen & Toubro Ltd. Vs. Union of India[7], the decision of this Court in M/s.Khaitan Chemicals And Fertilizers Ltd. Vs. Union of India[8], the decision of Rajasthan High Court in Shree Raj Pan Masala Private Limited Vs. Union of India And Anr.9, decision of the Supreme Court in Shree Raj Pan Masala Private Limited And Anr. Vs. Union of India And Anr.10, the decision of this Court in Sameer Shah (Real Name “Javed Shaikh”) vs. The Union of India & Anr.11, the decision of Delhi High Court in Basudev Garg vs. Commissioner of Customs12. 3 2015 (324) ELT 641 (S. C.) 4 2017 (350) ELT 486 (Bom) 5 2017 (356) ELT 233 (Bom.) 6 2010 (260) ELT 514 (All.) 7 2016 (331) ELT 353 (Bom.) 8 2013 (292) ELT 44 (Bom.) 9 D.B. Civil WP NO.11566 of 2016, decision dt.10/05/2017 10 SLP (C) No (s). 23214 of 20172017, decision dt. 15.9.2017
15. On the other hand Mr.Adik, learned Counsel for the revenue while opposing the petition has reiterated the contentions as urged by the Revenue in the reply affidavit. Mr.Adik would submit that the petition ought not to be entertained on the ground that the petitioner has an equal efficacious alternate remedy of an appeal before the CESTAT under Section 129A of the Customs Act. He submits that it is only to avoid the mandatory pre-deposit of the amount, the present petition has been filed. It is his contention that the facts and circumstances of the case are such that the contention of the petitioner that the petitioner is not provided for an opportunity to cross-examine the said three witnesses, is totally untenable inasmuch as the impugned order is a detailed order relying on several materials and it is not passed solely on the basis of the statements made by three witnesses. He submits that the contention that the provisions under Section 138B of the Customs Act would itself recognize an opportunity of cross examination, would be untenable in quasi judicial proceedings namely of the adjudication of the show cause notice. It is his submission that the strict principles of evidence are applicable to the criminal trial and would not be applicable to the proceedings under the show cause notice issued under Section 124 read with Section 28 of the Customs Act. In support of his contention, Mr. Adik has placed reliance on the decision of the Supreme Court in the case Telestar Travels Pvt. Ltd. (supra), Basudev Garg (supra), as also the decision of the Madras High Court in “The Commissioner of Customs (Appeals-II) & Anr. Vs. Shri. Vijayraj Surana”13, as also the decision of the Division Bench of this Court in United Spirits Ltd. Vs. The Union of India & Anr.14 The principles as laid down in these decisions are well settled. Analysis and Conclusion
16. At the outset, we would deal with the petitioner’s contention referring to the provisions of Section 138B of the Customs Act to consider whether such provision would ipso facto provide for an opportunity to cross examine the witnesses and more particularly considering the provisions of sub-section (2) which are made applicable to other proceedings under the Customs Act. To appreciate such contention as urged by the petitioner, we would be required to note the provisions of Section 138B of the Customs Act, which read thus:- “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 13 W.A.No.1763 of 2021 & C.M.P. No.11024 of 2021 dt. Of decision 17/8/2021
14 Writ Petition No.8516 of 2018, Decision dt. 14/6/2019 be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provisions of sub-section (1) shall so far as may be, apply in relation to any proceeding under this Act, other than a proceeding before a court, as they apply in relation to a proceeding before a Court.]” (emphasis supplied)
17. A plain reading of Section 138 B would show that this provision pertains to the relevancy of statements under certain circumstances which stipulates that a statement made and signed by a person before any Gazetted Custom Officers, may during the course of any inquiry or proceedings under the Customs Act, shall be relevant, for the purpose of proving, “in any prosecution for an offence” under the Customs Act, the truth of the facts which it contains eventualities as provided for in clauses (a) and (b) of sub-section (1). Sub-section (1)(a) stipulates the eventuality. 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; and in situation under sub-section (1)(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. Sub-section (1) therefore clearly implies that it is only in the proceedings before the Court and in the context of any prosecution for an offence under the Customs Act, the statement of a person as recorded by the Customs Officer would be held to be relevant.
18. Insofar as the second limb of Section 138B as provided for in subsection (2) of the said provision is concerned, it clearly implies that the provisions of sub-section (1) shall apply in relation to any proceedings under the Customs Act (other than a proceeding before a Court), in a manner they apply in relation to a proceeding before a Court. In other words, the relevancy of a statement which sub-section (1) of Section 138B speaks about, would be held to be admissible and relevant even in relation to any proceeding under the Customs Act, in a manner it is so applicable before a Court as provided for under sub-section (1).
19. On such meaning which can be attributed to Section 138B, the contention of the petitioner is required to be tested. At the outset, we may observe that Section 138B per se does not provide for any cross examination, as the provision deals with relevancy of statements in the facts and circumstances of the case. As to whether an opportunity of cross examination ought to be given in regard to the statements as recorded by the Customs Officer, would be required to be considered in the course of adjudication of the show cause notice. Considering the implications, the provisions of Section 138B would bring about, we do not find that in the facts and circumstances of the case, it can be argued by the petitioner as an absolute principle of law, that an opportunity of cross examination of three witnesses ought to have been granted to the petitioner. This for more than one reason, that sub-section (2) is required to be read in conjunction with sub-section (1). Sub-section (1) clearly provides for relevancy of statements as made and signed before the Gazetted Officer of the Customs only in relation to any prosecution for an offence under the Customs Act and not otherwise. Although sub-section (2) makes a provision that the provisions of sub-section (1) are applicable in relation to any proceeding under the Customs Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court, it cannot be countenanced that sub-section makes a blanket provision for cross examination of such persons whose statement have been recorded before any Gazetted Officer of the Customs during the course of any inquiry or proceedings. In fact clause (b) of sub-section (1) makes a contrary indication, when it refers to the statement of the persons who are 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 are eventualities wherein such persons can never be available for cross examination. Sub-section (1) also does not in any manner take away the discretion of the Customs Officer to accord appropriate weightage to the material and / or evidence before him in adjudicating the show cause notice. We are thus not inclined to accept the contention as urged on behalf of the petitioner that Section 138B be read as creating an absolute right of cross examination of such persons on behalf of the noticee in the event the statements are made before any Customs Officer, during the course of any inquiry which are subject matter of consideration in adjudication of the show cause. In our opinion, such contention as urged on behalf of the petitioner, if accepted, would militate against the provisions of clause (a) of sub-section (1) of Section 138B which also includes complete discretion which is made available to the adjudicating officer, to hold statements as recorded relevant even in given situation. When the provision itself manifest such discretion to the adjudicating officer, then any demand for cross examination would be required to be tested, in the facts and circumstances of the case, including by applying the test of prejudice which may be required to be discharged. For such reasons, we reject the contention of the petitioner that any absolute right was created by virtue of Section 138B on the petitioner to demand cross examination of the three witnesses in the facts of the present case.
20. Even otherwise, it is also important to note that show cause notice was issued in March 2000 and the request for cross-examination was made for the first time on 15 February 2017 i.e. almost after a period of more than 17 years. In the intervening period, the petitioner took recourse for settlement of the show cause notice by approaching the Settlement Commission and the lis in regard to the Settlement Commission ultimately reached the Supreme Court and the Supreme Court granted 3 months time to the petitioner to approach the Settlement Commission. However, the petitioner did not approach the Settlement Commission within the said period resulting into revival of the show cause notice of March 2000. In our view, on such premise the petitioner now urging a plea of cross-examination not being granted after a period of 17 years, from the date of show cause notice, itself would show the lack of bonafides of the petitioner.
21. The persons whose cross-examination is sought are the persons with whom the petitioner had business transactions and who were part of the transactions under the investigation. They are also the co-noticees in the impugned proceedings. In these facts, it would not be appropriate for us to accept the submissions of the petitioner that merely because the crossexamination was not given, the order-in-original is required to be quashed more so, when the respondents had issued notices to the persons whose statements were relied upon, however, these persons either made written submissions or choose not to appear.
22. We have perused the grounds raised in the present petition and the only ground on which the order-in-original is sought to be quashed is nongranting of opportunity to cross-examine three persons whose statements are relied upon in the order-in-original and the show cause notice. There is no submission on the merits of the case even prima facie which would show that the petitioner is merely taking recourse to a technical plea, to avoid the liability imposed by the order-in-original. In the facts of the present case, in our extraordinary jurisdiction we cannot entertain such plea.
23. On a perusal of the impugned order-in-original which runs into 118 pages and on a holistic reading of the order, it cannot be said that the order is passed only on the statements of three witnesses of which crossexamination has not been granted, but there were various other direct evidences against the petitioner, for the duty liability to be fastened on the petitioner. Thus, the petitioner’s plea as urged are after 17 years, cannot be a ground for quashing the order-in-original. In our opinion, the petitioner is resorting to be selective to dodge the proceedings, on raising hyper technical issues, which even otherwise are without merit.
24. Insofar the decisions as relied on behalf of the petitioner are concerned, we do not wish to burden this judgment in discussing such decisions, suffice it to observe that the principles as laid down in the said decisions are well settled, however, for the reasons as discussed by us hereinabove, the decisions are certainly not applicable.
25. In the light of the above discussion, we find no merit in this petition. It is accordingly dismissed. No costs. [JITENDRA JAIN, J.] [G. S. KULKARNI, J.] Designation: PS To Honourable Judge