M/s.Mani Bhadras Trading Company v. The Commissioner of Customs

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 18.08.2009CORAMTHE HONOURABLE MR.JUSTICE S. RAJESWARANW.P.No.19141 of 2009 and M.P.No.1 of 2009M/s.Mani Bhadras Trading CompanyRep. by its ProprietorShri Bhavesh V.Sakaria ... Petitioner VsThe Commissioner of Customs,(Seaports – Exports),Customs House,60, Rajaji Salai, Chennai 600 001. ... RespondentWrit petition is filed under Article 226 of theConstitution of India for issuance of a Writ of CertiorarifiedMandamus, calling for the records of the respondent connected withF.No.CAU/DRI/27/2008 dated 28.07.2008, quash the same andconsequently direct the respondent to afford cross examination of allpersons sought for vide interim reply dated 03.04.2008 to the showcause notice No.VIII/48/37/2007-DRI dated 06.03.2008 furnished by thepetitioner in the course of adjudication proceedings, pending beforethe respondent.For Petitioner : Mr.B.Sathish Sunder For Respondents : Mr.T.R.Senthil KumarSenior, Central GovernmentStanding counselO R D E R The case of the petitioner is as follows:The petitioner is a proprietorship concern. They imported SelfAdhesive BOPP Tapes under 20 consignments during the period from 2006and 2007 and had filed various Bills of Entry for clearance of thesame through Chennai Port. The DRI, Chennai found that the said SelfAdhesive BOPP Tapes were undervalued by the petitioner concern toevade payment of appropriate customs duty. Thereafter, the Officersof the D.R.I. searched the premises of the petitioner Company on20.06.2007 and recovered two hard discs from the two PersonalComputers under a Mahazar. The hard discs were sent to Government https://hcservices.ecourts.gov.in/hcservices/ Examiner of Questioned Documents (GEQD), Hyderabad for forensicanalysis. The analysis report was received vide letter dated31.08.2007 from the Government Examiner of Questioned Documents,Hyderabad. The said report revealed that the petitioner had resortedto mis-declaration of the value of the imported goods (self-adhesivetapes) by preparing second set of invoice, which was recovered fromthe hard discs seized from the petitioner concern. It was also foundthat the original invoice submitted to the Customs department forclearance of the goods by the petitioner was shown at a lesser valuethan the second set of invoice retrieved from the hard discs showingvalue payable to the supplier in order to evade payment of highercustoms duty. Under Section 108 of the Customs Act, 1962,investigations were conducted with different persons and statementswere recorded on different dates. Thereafter, the petitioner and hisassociate Mr.Sudhir Ostwal were arrested on 21.09.2007 and they wereenlarged on bail later. A show cause notice dt.06.03.2008 was issuedby the DRI to the petitioner and his associate Mr.Sudhir Ostwalcalling upon them to show cause as to why action should not be takenagainst them as stated in the notice. The petitioner through hiscounsel/Consultant sent an interim reply dated 03.04.2008 to the showcause notice sent by the respondent, denying the allegations andspecifically requesting for cross examination of the authors of theGEQD report as the show cause notice very heavily relies on the sameand also the officers from DRI who recorded the statements. Though apersonal hearing was granted to the petitioner, which was held on22.07.2008, the cross examination sought for by the petitioner wasrejected. Aggrieved by the same, the above writ petition has beenfiled for the aforesaid relief.3. I have heard the learned counsel appearing for thepetitioner and Mr.T.R.Senthil Kumar, learned Central GovernmentSenior Standing counsel appearing for the respondent. I have alsogone through the documents including the Counter affidavit filed bythe respondent.4. The learned counsel for the petitioner would submit thatthe rejection of the request made by the petitioner for crossexamination of Government Examiner of Questioned Documents and thepersons who retrieved the data from the two hard discs seized fromthe Personal Computers belonged to the petitioner concern, is illegaland liable to be interfered with by this Court. Moreover, when theshow cause notice heavily relies on GEQD report to sustain theallegations set out in the show cause notice, the cross examinationas sought for by the petitioner in the interim reply ought to havebeen allowed. Further, according to him, the adjudication process ofthe respondent is quasi-judicial in nature and if any order thatwould be passed in the proceedings would have civil consequences.Therefore, it is a trite law that any order that gives rise to civilconsequences would attract the principles of natural justice. https://hcservices.ecourts.gov.in/hcservices/ Further, a reasonable opportunity contemplated under the provisionsof the Act includes cross examination and therefore, request made bythe petitioner in reply to the show cause notice should have beenallowed and denial of the same is bad in law. Moreover, in order todefend the case of the petitioner effectively, the cross examinationas sought for by the petitioner concern is necessary. The respondentbeing a statutory authority should not stand on technicality toreject the request for cross examination. In support of hissubmissions, the learned counsel relied upon the following judgmentsto reiterate the fact that reasonable opportunity would include crossexamination also.1.1996(88) ELT A187 (SC) (Collector Vs Kiran Overseas)2.2000(117) ELT 538 (Sounds N.Images Vs Collector of Customs)3.2000(122) ELT 641 (SC) (Swadeshi Polytex Ltd. Vs Collector of CEX)4.2005(181) ELT 176 (SC) (Commissioner of CEX, Chandigarh Vs MetroTyres Ltd.)5.2000(123) ELT 50 (Bombay) Nagraj Walchand Jain Vs G.Koruthu,Collector of CEX)6.2000(125) ELT 129 (Madras) (M.Ponnalagu Pillai Vs Collector ofCustoms, Madras)7.1996(88) ELT A187 (SC) (Kiran Overseas Vs Collector of Customs)8.2001(129) ELT 654 (Tri-Mum) (Carrara marble & Granite IndustriesVs Commissioner of Customs (EP), Mumbai)9.2001(129) ELT 701 (Tri-Del) (Rathi Ispat Ltd. Vs Commissioner ofCEX, Meerut)The learned counsel for the petitioner further relied heavily on theunreported judgment dt.24.06.2005 made in a batch matters inW.P.Nos.18918 of 2000, etc. to reiterate the fact that when a requestfor cross examination was made even at the stage of submitting anexplanation to the show cause notice, should be entertained, as itwould only be in compliance with the fundamental principles ofnatural justice and criminal jurisprudence. Therefore, he submitsthat rejection of the request made by the petitioner for crossexamination warrants interference by this court and the impugnedorder dt.28.07.2008 is liable to be set aside. Consequently, therespondent should be directed to permit the petitioner to crossexamine the authors of the GEQD report and the officers of D.R.I. whorecorded the statements.5. Per contra, the learned Central Government SeniorStanding counsel appearing for the respondent while reiterating the https://hcservices.ecourts.gov.in/hcservices/ averments made in the counter affidavit would submit that as thedocuments annexed to the show cause notice were retrieved from thehard discs of the petitioner's Personal Computers, the request forcross examination of the authors of GEQD, made by the petitioner isuntenable. Moreover, according to the learned counsel for therespondent, the GEQD Officer has not done anything excepting printingout the data available in the hard discs of the petitioner's PersonalComputers. Therefore, nothing else was added to the materials whichwere annexed to the show cause notice. The learned counsel for therespondent also produced a copy of the annexure to the show causenotice and submits that all the materials relied upon by therespondent have been furnished to the petitioner. He further submitsthat when the materials retrieved from the two hard discs of thePersonal Computers belonged to the petitioner themselves, there wasno need to cross examine the Officers of DRI and GEQD. Therefore,the rejection of the request for cross examination would in no wayaffect the interest of the petitioner or the proceedings initiatedagainst the petitioner.6. The learned counsel for the respondent further submitsthat the statements were recorded by the DRI officials under Sec.108of the Customs Act 1962 and the same have not been retracted by thepetitioner at any stage. He further adds that the officer of GEQDcould not be made available for cross examination since he hasproceeded on long leave and also he has already been relieved fromForensic Department, Hyderabad. He further submits that any orderpassed by the respondent authority under the Customs Act, 1962 isamenable to an appeal remedy under the said Act before the AppellateTribunal. Therefore, the writ petition has been filed withoutexhausting the statutory remedy available under the said Act and thesame is liable to be dismissed on that score alone. Similarly,statements recorded under Sec.108 of the Customs Act are voluntary innature and the same have not been retracted thereafter. Therefore,there is no question of cross examining the officers without citingany compelling reason. He further submits that the attempt made bythe petitioner to cross examine the officer from GEQD is only toprotract the proceedings initiated against the petitioner and nothingelse. In support of his submission, he relied upon the judgmentreported in (1973)2 SCC 438 (M/s.Kanungo & Company Vs Collector ofCustoms and others) and (2009)4 MLJ 417 (Ramachandra Rexins PrivateLtd., Bangalore Vs Customs, Excise and Gold (Control) AppellateTribunal, Chennai and another) to reiterate the fact that theprinciples of natural justice do not require in the matter of seizureof goods under Sea Customs Act, the persons who have giveninformation should be examined in the presence of the person fromwhom the seizure was made or should be allowed to be cross examinedby him on the statements made before the Customs authorities.Therefore, according to the learned counsel for the respondent, thecase in hand does not require cross examination of the officers from https://hcservices.ecourts.gov.in/hcservices/ DRI and GEQD and the writ petition does not merit any considerationand the same is liable to be dismissed.7. I have considered the rival submissions carefully withregard to facts and citations.8. It is a case of the petitioner that on the investigationmade by the officers from DRI that adhesive tapes imported by thepetitioner concern have been undervalued and proceedings wereinitiated under the Customs Act against the petitioner concern.While sending this show cause notice, the materials relied upon bythe respondent were sent along with the show cause notice. Whilereplying to the show cause notice, the petitioner stated that certainmaterials retrieved from the hard discs of the Personal Computersbelonged to the petitioner were not in consonance with the dataavailable with the petitioner. Therefore, the petitioner in reply tothe show cause notice, made a request to the respondent to crossexamine the concerned Officer from GEQD who had taken the print outsfrom the hard discs of the petitioner's Personal Computers and alsothe author of the GEQD report so that the petitioner can defend thecase effectively. But, the respondent rejected the same in theimpugned order stating that there is no need for cross examination.Though the learned counsel for the petitioner reiterate the fact thatreasonable opportunity would also include cross examination, I amunable to accept the submissions made by the learned counsel for thepetitioner.9. Though it is needless to add that reasonable opportunitywould include cross examination, the judgment cited by the learnedcounsel for the petitioner, wherein the learned Single Judge of thisCourt has held that cross examination of witnesses are not to bedispensed with only on the ground that the subject matter is asensitive issue. I am of the considered view that the said judgmentis distinguishable on facts and law from the case on hand. Whilechallenging the final order passed by the respondent, the petitionerhas taken a stand that the denial of cross examination of theofficers from DRI and GEQD would violate the principles of naturaljustice.A perusal of the judgments rendered by the Hon'ble SupremeCourt in (1973)2 SCC 438 (cited supra) and Division Bench of thisCourt in (2009)4 MLJ 417 (cited supra) would clearly show that theprinciples of natural justice do not require cross examination of thepersons who have given information. However, in this case, whilereplying to the show cause notice received from the respondentdepartment, the petitioner has pointed out that there are certaindiscrepancies in the materials annexed to the show cause notice andtherefore, the petitioner prayed for cross examination of theofficers from DRI and GEQD. Whereas, as rightly pointed out by thelearned counsel appearing for the respondent, the documents reliedupon by the respondent are nothing but prints out taken from the hard https://hcservices.ecourts.gov.in/hcservices/ discs of the Personal Computers belonged to the petitioner. It isopen to him to point out discrepancies if any, before theadjudicating authority. The cross examination as sought for by thepetitioner would in no way help the petitioner as there is nomaterial given or spoken to by the respondent department.10. Therefore, I am in full agreement with the learnedcounsel for the respondent that absolutely there is no materialwarranting interference by this court so as to permit the petitionerto cross examine the officers from DRI and GEQD.11. In the result, the writ petition is dismissed.Consequently, connected M.P.No.1 of 2008 is closed. No cost.Sd/Asst.Registrar/true copy/Sub Asst.Registrarvaan ToThe Commissioner of Customs,(Seaports – Exports),Customs House,60, Rajaji Salai, Chennai 600 001.1 cc To Mr.B.Sathish Sunder, Advocate, SR.40203.W.P.No.19141 of 2009 and M.P.No.1 of 2009 JRG(CO)RVL 23.10.2009