Mitesh Impex & Ors. Vs Union of India & Anr. (Gujarat High Court)
The Gujarat High Court allowed a writ petition challenging a penalty order passed under the Customs Act, 1962, holding that the adjudicating authority failed to comply with the mandatory requirements of Section 138B relating to cross-examination of witnesses. The petitioners, a partnership firm and related individuals engaged in manufacturing excisable goods, were issued a show cause notice proposing penalties under Sections 112(a) and 114(iii) of the Act. The adjudication culminated in an order imposing penalties, which was earlier set aside by the Customs, Excise and Service Tax Appellate Tribunal and remanded for fresh adjudication with a specific direction to grant the petitioners an opportunity to cross-examine six witnesses whose statements were relied upon.
Upon remand, the adjudicating authority granted opportunities for cross-examination. Three witnesses appeared and were cross-examined, deposing in favour of the petitioners, while three other witnesses failed to appear despite multiple opportunities. In the impugned order dated 18.03.2025, the adjudicating authority relied on the statements of the three witnesses who did not appear for cross-examination and ignored the evidence of the three witnesses who were cross-examined. This approach was challenged before the High Court.
The Court examined Section 138B of the Customs Act, which governs the relevancy and admissibility of statements recorded during inquiry or proceedings. It held that statements can be relied upon only if the conditions under Section 138B(1)(a) or (b) are strictly satisfied. Where a witness is available, reliance on their statement requires that the assessee be given an opportunity of cross-examination. Even where a witness is unavailable, the adjudicating authority must record specific findings on the reasons for non-availability, attempt to secure the witness within a reasonable time, confront the assessee with the statement, allow rebuttal, and seek corroborative evidence.
