Evidence Unavailable for Cross-Examination cannot be Treated as Admissible
In the case of Commissioner of Customs vs. Deepak Dialani, adjudicated by CESTAT Mumbai, the primary issue revolved around the admissibility of evidence, particularly the lack of availability of witnesses for cross-examination. Here is a summary of the case:
Background: An investigation was initiated by the Directorate of Revenue Intelligence (DRI), Mumbai, based on information about an alleged racket involving smuggling computer parts and peripherals. Shri Deepak Dialani and others were accused of smuggling goods from Hong Kong, misdeclaring them, and selling them in the local market using fictitious company names. A show cause notice was issued, proposing demands of duty and penalties on Deepak Dialani and other co-noticees.
Cross-Examination and Evidence: During the denovo adjudication process, the Commissioner of Customs (Adjudication) ensured the provision of documents requested by the parties and cross-examination of witnesses. However, cross-examination was conducted for only four witnesses, and the others did not appear. The Commissioner disregarded the statements and panchnamas of those witnesses whose cross-examination could not be conducted.
Legal Principles: The Commissioner cited the Supreme Court’s judgment in the case of Gopal Saran Vs. Satyanarayana, which holds that evidence unavailable for cross-examination should not be treated as admissible. This means that if a person cannot be cross-examined, their statements should be ignored.
Commissioner’s Findings: After the cross-examination of the four witnesses and considering the documents presented, the Commissioner concluded that the allegations based on the statements recorded under Section 108 of the Customs Act had to be discarded. As a result, the proceedings in the show cause notice were dropped.
Burden of Proof: The Commissioner also emphasized that the burden of proving that the goods were not smuggled rested with the department. In this case, it was not established that Deepak Dialani was the importer, and, therefore, he could not be charged with duty.
Impugned Orders: The impugned orders were based on a thorough examination of the facts, evidence, and legal provisions. The Commissioner found that the demand of duty and imposition of penalties were not sustainable in this case, and thus, the show cause notice proceedings were dropped.
Conclusion: The case of Commissioner of Customs vs. Deepak Dialani highlights the importance of adhering to principles of natural justice, including the right to cross-examine witnesses and the provision of documents in adjudicating customs cases. In this instance, the Commissioner’s decision to drop proceedings was based on a careful consideration of the evidence and legal standards, ensuring a fair and just outcome.
FULL TEXT OF THE CESTAT MUMBAI ORDER
The brief facts of the case are that an investigation was conducted by the Directorate of Revenue Intelligence (DRI), Mumbai on the basis of an information received by them that one Shri Deepak Dialani along with several other persons is running a racket of smuggling computer parts, peripherals, and subsequent selling of such goods in the local market against bills/invoices of various companies. The ring of importers who used to smuggle computer parts, peripherals etc., have supplied these goods from Hong Kong by purchasing from one Shri Prakash Dialani (brother of Deepak Dialani) and brought in their personal luggage; that Prakash Dialani also used to courier such goods to Deepak Dialani, which was cleared by mis-declaration of the contents thereof and without payment of duty. The goods so smuggled were then supplied to various computer manufacturing companies under invoices/bills of 13 fictitious/bogus companies, that payment towards supply made under the bills/invoices of such companies were received by cheque, which were then encashed through cheques and payments deposited in accounts maintained by the fictitious companies and that cash was withdrawn from these accounts subsequently. On conclusion of the investigation, a show cause notice dated 21/28.12.1998 proposing demand of duty on computer parts and peripherals alleged to have been smuggled under Section 28 of the Customs Act, 1962 besides proposing imposition of penalty on Shri Deepak Dialani under Section 112(a) and (b) ibid, as the said goods were liable for confiscation and penalty on other persons involved in the case. The SCN was adjudicated by the Commissioner (Appeals) by confirmation of the adjudged demands and imposed penalties on Shri Deepak Dialani and 8 other co-noticees. Feeling aggrieved by this order, the various parties have appealed before the Tribunal, who had ordered vide Order No. A/633 to 637/WZB/2004/C-I dated 25.3.2004 as follows:
“9. In the light of the above discussion on non-supply of documents to Deepak Dialani and denial of the right of cross-examination we set aside the impugned order and remand the case to the jurisdictional Commissioner of Customs for fresh decision after supply of documents relied upon against the Deepak Dialani in the impugned order and supply of 67 documents requested by him and after permitting cross-examination of 17 persons, as per the list given by him, referred to in para 39.1 of the impugned order. Fresh orders shall be passed after extending a reasonable opportunity of hearing to all the above named applicants.”
Accordingly, the case was taken up for denovo adjudication by the learned Commissioner of Customs (Adjudication) as per the directions of the Tribunal, on the aspect of non-supply of documents and cross examination of witnesses and panchas, and he passed an order CAO No. 23/2009/CAC/CC/KS dated 19.02.2009 and CAO No. 20/2009/CAC/CC/KS dated 16.02.2009 (herein after, referred to as ‘the impugned orders’) dropping the proceedings initiated in the show cause notice. In review of the aforesaid impugned orders, the Committee of Chief Commissioners of Customs had preferred to file these appeals before the Tribunal.
2. Learned Authorised Representative for Revenue reiterated the grounds made in the appeal papers to state that it is a case of outright smuggling of computer parts and peripherals. Shri Deepak Dialani was the master mind in this case operating through carriers and courier companies for smuggling of goods and the depositions made by carriers, buyers, agents etc. have confirmed this. In view of this, he stated that demand of duty invoking extended period and imposition of penalty on Shri Deepak Dialani and other persons involved in this case are sustainable and the department’s appeals may be allowed.
3. Learned Counsel appearing for the respondent Deepak Dialani have stated that department had not supplied to them with all the documents and failed to make all witnesses available (except four) for cross-examination during the denovo proceedings and thus the directions of the Tribunal in their case have been barely complied with by them. He further stated that various documents themselves had a material bearing on the falsity of the allegations against the respondents. The impugned orders cogently deal with the aspect of how the respondent Shri Deepak Dialani cannot be said to be the importer and therefore cannot be saddled with any liability to pay duty. They claim that there is no infirmity in the impugned orders and thus the appeals filed by the department are liable to be dismissed.
4. Heard both sides and perused the records of the case.
5. The brief issue for consideration before us, whether the impugned orders have complied with the remand directions given by this Tribunal in its order dated 25.3.2004 in adjudication of the cases and whether these are sustainable in law.
