Cross-Examination not Absolute Right in Customs Cases, But Necessary for Fair Trial in Certain Circumstances: Delhi HC [Read Order]

In a recent ruling, the Delhi High Court held that while cross-examination is not an absolute right in customs adjudication, it becomes necessary in cases where statements of co-accused form the primary basis for penalties.

The case arose from an investigation into five firms allegedly involved in misdeclaring imported goods and attempting to clear shipments without proper Bills of Entry, violating the Customs Act, 1962. The Principal Commissioner of Customs (Import) imposed penalties on various individuals and firms, including Sushil Aggarwal and Sunil Aidasani, under Sections 112 and 114A of the Customs Act.

Sushil Aggarwal filed an appeal before CESTAT, arguing that he was denied the right to cross-examine Inderpreet Singh Bhalla, whose statement was important to the allegations against him. CESTAT dismissed his appeal, upholding the penalties.

In contrast, CESTAT allowed Sunil Aidasani’s appeal, ruling that the Customs Department had not followed the procedure under Section 138(B) of the Customs Act for admitting Bhalla’s statement into evidence.

Become a PF & ESIC expert with our comprehensive course - Enroll Now

The Customs Department challenged CESTAT’s decision regarding Aidasani, arguing that he should not have been granted relief and Sushil Aggarwal also appealed claiming discrimination in the tribunal’s approach.

The Customs Department’s counsel maintained that cross-examination is not an absolute right and cited the Supreme Court ruling in Kanungo & Co. vs. Collector of Customs, Kolkata (1983), which held that informants need not be cross-examined in adjudication proceedings.

A division bench comprising Justice Prathiba M. Singh and Justice Dharmesh Sharma referenced the Kanungo & Co. vs. Collector of Customs (1983) where the Supreme Court held that informants need not be cross-examined. Still, in Krishan Kishor Aggarwal vs. Additional Commissioner of Customs (2019), the Delhi HC ruled that denying cross-examination when a co-accused’s statement is relied upon violates natural justice.

The court also cited Swadeshi Polytex Ltd. (2000) and Andaman Timber Industries (2015), where the Supreme Court emphasized that cross-examination is essential in quasi-judicial proceedings if statements form the basis of penalties. Based on these rulings, the court directed the Customs Department to allow both Sushil Aggarwal and Sunil Aidasani to cross-examine the key witness before re-adjudication.

The court waived the pre-deposit requirement for future appeals, considering that this was already the second round of litigation. The appeals were disposed of accordingly.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates