Madras HC directs Fresh Appeal to CESTAT after Denial of Cross-Examination of Customs Auditors in Areca Nut Case [Read Order]

The bench referring to the SC and HC judgments noted that the right of cross-examination is not an absolute requirement
Madras high court - CESTAT - Areca Nut Case - Cross-Examination of Customs Auditors - taxscan

In a recent ruling, the Madras High Court rejected the request of petitioner to cross examine the Customs Auditors with regards to the reclassification of its products into ‘Areca Nuts Split’. The court also granted fresh appeal opportunity before the appellate authority i.e CESTAT.

The bench of Justice Senthilkumar Ramamoorthy observed that “After referring to judgments of the Hon’ble Supreme Court and this Court to the effect that the right of cross-examination is not an absolute requirement .”

The petitioner, M/s. Mango Tree Traders who declared the goods as “unflavoured supari (betel nut product); APL supari (boiled betel nut product),” had his classification rejected. The customs authorities reclassified the goods as “areca nuts split,” resulting in revised assessable values, customs duty, and penalties.

The petitioner challenged the order, asserting that principles of natural justice were violated due to the denial of his request for cross-examination. Despite raising other grounds, the focus remained on the procedural lapse.

The petitioner’s counsel argued that the denial of cross-examination invalidated the order, citing the Supreme Court’s judgment in Andaman Timber Industries v. Commissioner of Central Excise, Kolkata – II, and the Calcutta High Court’s ruling in Commissioner of Customs, Central Excise & S.T., Siliguri v. Subodh Das.

The High Court observed that the petitioner requested cross-examination of the auditors, assessing officers, officials who approved the assessment, examining staff, and the chemical examiner responsible for testing the samples before assessment. The court further noted that no compelling reason was provided to justify the need for cross-examination. It was also noted that all relevant documentary evidence such as copies of statements, mahazars, reports and RUDs had been provided to the petitioner. 

Further stated that, in these facts and circumstances, the assessing officer’s conclusion stands robust without any apparent flaw and aligns with the principles established by both the Supreme Court and this Court.

The bench added that the Supreme Court’s ruling in Andaman Timber Industries clarifies that interference due to denied cross-examination typically hinges on the pivotal role of witness statements in forming the impugned order. The court further observed that the petitioner’s counsel failed to demonstrate how these witness statements formed the basis of the current order.

The Court acknowledged that the impugned order challenged in the writ petition is appealable before the CESTAT. It directed the tribunal to promptly hear and decide on the petitioners’ appeal, instructing that the appeal must be considered on its merits without any scrutiny of the limitation period, provided it is filed within 10 days of receiving the court’s order.

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