The High Court of Madras held that adjudication proceedings under the Customs Act, 1962 cannot solely be based on the inculpatory statements of witnesses and notice alone. Such statements can be only used for corroborating the case which the Department proposes to establish before the quasi-judicial authorities.
The petitioners, M/s.JetUnipex and Shri. P. Sanjay has been issued with the show cause notice by Directorate Of Revenue Intelligence after investigation to show cause as to why the value of the goods imported by the 1st petitioner should not be countermanded and value adopted in the notice should be adopted; and why differential customs duty have sought to be demanded from the 1st petitioner; penalty should not be imposed under section 112 and 114 AA of the Customs Act, 1962 on the petitioner.
During the course of the investigation, statements were recorded from the Shri. P. Sanjay, a statement was also recorded from the proprietor of the M/s.JetUnipex, statement of the Branch Manager of the petitioner’s Custom House Agent and from one the Managing Partner of M/s. Krishna Logistics Chennai, another Custom House Agent (CHA) were recorded by the officers of the 2nd respondent.
By the impugned communication, the appraiser attached to the office of the respondent informed the petitioners that the statement recorded from the named persons were true and correct and that no reasons were furnished for cross-examination and hence request cannot be acceded. Accordingly, the petitioners were directed to appear for a personal hearing before the respondent.
The Single-Judge Bench of Justice C. Saravanan held that adjudication proceedings under the Customs Act, 1962 cannot solely be based on the inculpatory statements of witnesses and notice alone. Such statements can be only used for corroborating the case which the Department proposes to establish before the quasi-judicial authorities.
However, the court is of the view that the department is bound to prove the case based on the balance of probabilities as per the well-recognized principle of law in the case of departmental adjudications.
“It is therefore made clear that in case primary reliance is to be placed on the statements of the 2 employees of the 2 CHA’s for passing adjudication order, the 1st respondent shall issue a suitable summons for cross-examination by the petitioner before passing such order,” the court said.
The court directed the respondent authority to complete the adjudication proceedings within a period of 9 months from the date of receipt of this order since the dispute pertains to import made by the petitioner between 2010 and 2013.
“It is for the 1st respondent to take a call as to whether it proposes to solely rely on the statements recorded under section 108 of the Customs Act, 1962 for confirming the demand in which case, the 1st respondent shall produce such persons for cross-examination by the petitioners,” the court said.
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